“Commitment to the fiscal rule, which puts a cap on debt at 60 percent of GDP but also introduces operational rules at lower public debt levels, will result in a smaller fiscal deficit. Consequently, public debt (including CBA debt) is projected to fall from 58.9 percent of GDP at end-2017 to 55 percent by 2020”, the report says.
According to the report, prudent macroeconomic policies, low inflation, and favorable terms of trade will continue to support economic expansion. Real GDP growth is expected to moderate to 5.3 percent in 2018.
The new government has shown commitment to fiscal prudence. Revenues overperformed in the first half of 2018, in part due to stepped-up efforts to fight tax evasion, according to the World Bank.
Both capital and current spending underperformed, resulting in a small fiscal deficit of 0.2 percent of GDP in the first half of 2018, it said.
Goods exports rose by 20 percent y/y, reflecting stronger external demand and higher metal prices. The import bill increased by 33 percent, one-third of which was for capital goods, mostly in the mining sector, the report said.
Nevertheless, the World Bank pointed out certain risks which migh...
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