The 2018 budget appropriately targets further fiscal consolidation, IMF reports. The 2018 budget envisages a further decline in the deficit while allowing for an increase in capital spending.
To achieve this, efforts to strengthen revenue administration should continue, especially to prevent the buildup of VAT claims. The authorities should also bolster efforts to further contain current spending, for instance, by containing the wage bill, improving the targeting of social programs, and reducing subsidies and equity injections to state-owned enterprises (SOEs).
Medium-term fiscal commitments should be completed as currently envisaged and require progressing with institutional fiscal reforms. Staff welcomes the authorities’ commitment to fiscal consolidation while accelerating high-priority infrastructure investment. A stronger framework for managing public investment will help improve efficiency on the use of public resources. The authorities’ commitment to comprehensively assess and monitor fiscal risks should be clearly reflected in the 2018 Fiscal Risk Statement. Efforts to improve the budgetary processes and fiscal reporting—for instance, by improving the coverage and measurement of fiscal aggregates to reflect activities of legal entities of public law (LEPLs) and SOEs, elaborating on compliance with fiscal rules, and strengthening macroeconomic and fiscal forecasting—will help improve fiscal transparency and accountability.