Despite some deceleration, growth is still robust (in the 6-7 percent range in 2015-16) and inflation remains low. However, the economy has been increasingly affected by lower commodity prices and a decline in foreign exchange inflows. As a result, a balance of payments gap has emerged and the exchange rate has depreciated substantially. While policy commitments undertaken at the time of the 4th review were followed, performance under the PSI has been less than satisfactory, NIR declined significantly as a result of external shocks and three quantitative assessment criteria missed at end-June 2015. The monetary policy stance was tightened with delays despite the loss in NIR and proved to be too accommodating. Greater progress has been achieved on structural reforms, despite some implementation delays. Against this backdrop, the authorities requested an arrangement under the standby credit facility (SCF) supported by a strong policy package of corrective measures that includes further fiscal adjustment, continued exchange rate flexibility, and tight liquidity management. These measures are essential in the short term to preserve macroeconomic stability, improve the international reserve position, and continue to attract foreign investment (including in the oil and gas sectors) to support growth. Key structural reform priorities include improving VAT administration, strengthening capacity for transparent public investment management, and deepening financial sector reforms.
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|Size: ||9.1 MB|
|Publisher: ||INTERNATIONAL MONETARY FUND|
|Date published: || 2016|
|ISBN: ||9781498360371 (DRM-EPUB)|
|Read Aloud: ||not allowed|