Fiscal measures help to adjust to the downturn
Overview:
The authorities have made a point of showing that they can survive the global economic crisis without assistance from the IMF. With the semi-fixed exchange regime stable and the level of foreign exchange reserves more than adequate the authorities certainly did not need to turn to the Fund for financial assistance. The question is, rather, whether a Fund program would have better guided economic policies going forward? To a large extent the authorities have, anyway, been forced to push through a series of unpopular fiscal measures to ensure budget financing and debt sustainability that the Fund might have proposed given the government’s reliance on access to the Eurobond market to ensure budget financing. This does not necessarily guarantee the implementation of deeper structural reforms however.