Movement toward unifying multiple exchange rates and a managed
float of the currency, along with licensing private banks to engage in
international banking and to offer foreign exchange services, shou...
shift more foreign exchange from informal to formal markets, increase
liquidity, and facilitate the central bank’s management of the exchange
rate. The government is establishing a formal interbank market and plans
to develop a secondary treasury securities market. A law to modernize
and grant operational autonomy to the central bank has been submitted
to the parliament.
Proposed fiscal reforms include simplifying the tax system, broadening
the tax base, and eventually moving to a value-added tax to ease
dependence on natural resources, which provide 23% of public revenue. Steps taken last year to give state enterprises more financial autonomy
and demand more accountability should facilitate their corporatization
and potential privatization. Coupled with higher net export receipts,
primarily from gas, these fiscal measures allow the government to
increase spending on health, education, and infrastructure while reining
in the fiscal deficit to 5.2% of GDP in FY2013.
Inflation is forecast to average 5.1% this year and next (Figure 3.27.6).
A lower fiscal deficit and reduced credit to the government from the
central bank should dampen inflation over the medium term.
Sources: International Monetary Fund; ADB estimates ( http://www.imf.org/external/country/mmr/)
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