Strong growth but off track with the IMF
Overview:
The economy continues to grow robustly. However it is largely reliant on variable external factors (worker remittances, FDI inflows, official transfers) rather than more consistent, domestically generated ones. Excessive public sector wage increases (promised ahead of elections last November) have pushed the government off track with its IMF program. With large-scale capital spending on motorways already pushing the fiscal deficit up significantly better control of current spending was a key component of the program. A new Staff-Monitored Program has now been agreed as the authorities seek to rebuild relations with the Fund in order to secure a new funding program. The banking sector is healthy but the export base must be strengthened via structural reforms as the current account deficit remains massive.