Despite some advancement of key structural reforms, the Board stressed more needed to be done, particularly in the fiscal area, given the country’s substantial expenditure needs and high public debt. The immediate priority was to address risks to the 2004/05 budget outlook stemming from ambitious revenue targets and substantial increases in wage expenses. The Board encouraged the authorities to strengthen revenue administration by recentralizing tax and customs administrations, and by introducing a valueadded tax in early 2007. It also stressed the importance of improving accountability and monitoring of public spending.
For more information, refer to Public Information Notices No. 05/2 (Lao P.D.R.) and 05/6 (Azerbaijan) on the IMF’s website (www.imf.org).
|Real GDP growth1||5.8||5.8||5.3||6.0||7.0|
|Inflation (period average)||7.8||10.6||15.5||11.2||7.8|
|(percent of GDP)|
|Overall government budget balance|
|External public debt||68.9||73.2||91.7||84.4||81.4|
Monetary policy has been restrained over the past year, but the recent rapid expansion of state bank credit could potentially undermine monetary discipline. On exchange rate policy, the Board considered the country’s flexible exchange rate system appropriate as long as interventions remain limited to smoothing operations.
The government completed its National Growth and Poverty Eradication Strategy for accelerating growth and improving the living conditions of the poor. These efforts will likely require continued support from the international community. The present arrangement with the IMF under the Poverty Reduction and Growth Facility was approved in April 2001 and extended by one year to April 2005.