The Executive Board of the
The authorities' economic reform program that will be supported by the SBA aims to reduce macroeconomic vulnerabilities, increase policy buffers and support growth, while making the economy more resilient to external shocks.
Following the Executive Board discussion on
"While fiscal policy is set to support economic recovery in the short run, the program aims at reducing the deficit over the medium term to create the space for fiscal policy to help stabilize the economy. The modernization of the tax system, including with support from the Fund will improve revenue collection while reducing distortions. Under the program, output and exchange rate volatility will be reduced by promoting a more even execution of the budget through the year.
"Monetary policy will continue to be anchored by inflation targeting, supported by an inflation consultation clause with the Fund and an enhanced regime of exchange rate flexibility. In addition, monetary policy effectiveness will be strengthened by ongoing efforts to reduce high levels of dollarization, while the modernization of the prudential and supervisory frameworks continues at a brisk pace.
"Structural reforms will be essential for achieving the program objectives of enhanced competitiveness and an improved business climate. In this context, the signing of the Deep and Comprehensive Free Trade Area (DCFTA) and EU Association Agreements are welcome developments that signal
The program will support macroeconomic stabilization and improve confidence by providing a framework to discipline macroeconomic and fiscal policy and by providing modest balance of payments financing.
Strengthening the economy's resilience to external shocks requires reducing
Fiscal and monetary policies will focus on reducing the fiscal deficit, containing fiscal risks, maintaining low and stable inflation, facilitating exchange rate flexibility, and supporting growth. The program will support strengthened fiscal risk disclosure and improvements in tax administration.
To achieve a budget deficit reduction to 3 percent of GDP in 2015, the authorities will adopt measures that include increasing excises on tobacco and moderating the growth of the public wage bill, as well as other categories of current spending by keeping them constant in real terms. A key principle for deficit reduction will be to avoid measures that disproportionately affect the poor and vulnerable.
Structural reforms will focus on improving the business environment, developing education and training, creating jobs, and reducing poverty and inequality. The reform agenda includes enhancing competition, strengthening property rights, developing a commercial dispute resolution mechanism, streamlining bankruptcy procedures, improving workers' skills, and further improving the public administration.
The National Bank of
View table here (http://www.imf.org/external/np/sec/pr/2014/pr14377.htm)
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