At the conclusion of the mission, Mr.
"The Fund mission reached preliminary understandings with the authorities on a set of economic policies detailed in an updated Letter of Intent. Discussions with the authorities focused on economic performance under the program and policies for the remainder of the program period.
"Economic activity is tentatively estimated to have expanded by about 1.4 percent year-on-year in the last quarter of 2013, while consumer price inflation moderated to 9.7 percent in December. The current account has shown an ongoing improvement, and net international reserves increased to more than
"Overall policy implementation under the program remains strong. All quantitative performance targets and indicative targets for end-December were met, including the floor on social spending. All structural benchmarks to date have also been met. For 2014 and beyond, the critical challenge remains to support economic growth, while continuing to undertake the necessary fiscal adjustment. Key elements of the authorities' updated program include:
* Actions to promote growth by improving competitiveness and the business climate and pursuing strategic investments, supported by the
* The next steps for tax policy reform. Forthcoming amendments to the General Consumption Tax Act will include eliminating the zero-rating for government purchases. Reform of property taxes is envisaged to be ready by the start of FY2015/16;
* The implementation of an action plan to modernize tax and customs administration, with a stronger Large Taxpayers Office, improved IT systems and performance measurement, and actions to lower the cost of compliance for taxpayers and towards trade facilitation;
* The establishment of an effective fiscal rule to enhance fiscal transparency and lock in the gains from fiscal consolidation. The aim is to limit the annual budget deficits of the public sector so as to achieve a reduction in public debt to no more than 60 percent of Gross Domestic Product (GDP) over the longer term and control fiscal risks. Legislation for the new fiscal rule is expected to be passed by Parliament before the start of the next fiscal year;
* Further developing the financial system, including by strengthening the legal and regulatory framework applicable to the securities dealers sector;
* Strengthening the social protection framework, with enhanced efforts to move recipients from welfare to work.
"These preliminary understandings are subject to approval by the IMF's Management and Executive Board. Provided that performance remains strong, Board consideration of the third review of
"The mission would like to thank the authorities and technical staff for their excellent cooperation."
TNS 30BautistaJude 140214-4637330 30BautistaJude
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