Financial Crime World

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Economic Outlook

The International Monetary Fund (IMF) has provided a forecast for the National Financial Program System (NFPS) in FY2023. Key points and recommendations from this forecast are as follows:

  • The fiscal deficit of the NFPS is projected to be 2% of GDP in FY2023, which is 0.3 percentage point lower than originally expected.
  • The current account deficit is expected to narrow from 1.5% of GDP in FY2022 to 0.8% of GDP in FY2023, but will narrow further to 0.6% of GDP over the medium term.

Risks

The balance of risks is tilted to the downside due to domestic and external factors such as:

  • Intensified political instability
  • Gang-related disruptions
  • Public health emergencies (further spreading of cholera)
  • Natural disasters
  • Volatile remittance flows
  • Lower-than-expected external financing
  • Renewed surges in global food and energy prices

Program Objectives

The overall objectives of the program remain achievable. Key actions to be taken include:

Revenue Collection

  • Sustaining efforts on revenue collection to reach revenue targets

Reform Implementation

  • Implementing reforms on revenue mobilization
  • Implementing reforms on social spending

Fuel Price Reform

  • Implementing fuel price reform with mitigating measures for vulnerable populations

Monetary and Exchange Rate Framework

  • Continuing implementation of the monetary and exchange rate framework

Banking Supervision

  • Strengthening banking supervision through risk-based supervision

Fiscal Policy

The FY2023 budget is consistent with the program objective of reducing the monetary financing of the deficit to lower inflation. New spending on food transfers is expected to reach 0.5% of GDP, funded by forthcoming external financing.

Recommendations

To ensure the success of the program, we recommend:

  • Sustaining recent efforts to boost revenue collection and implement reforms on revenue mobilization and social spending.
  • Using additional budget space to limit the monetary financing of the deficit in FY2023 and compensate those most affected by food price rises.

Overall, the IMF’s recommendations emphasize the importance of sustaining efforts to boost revenue collection, implementing reforms on revenue mobilization and social spending, and using additional budget space to reduce the fiscal deficit.