IMF urges gov’t to immediately cut spending

In its third post program monitoring assessment the IMF says urgent actions are needed including immediate spending cuts.

The IMF is encouraging the authorities to adopt a comprehensive medium-term fiscal consolidation program starting in June 2015.

The IMF directors say by the time June comes around on Monday the government should start announcing new measures.

They, as per usual, recommend lowering the wage bill – presumably either by cutting staff or slashing salaries.

They further advise strengthening tax administration to improve collections, cutting spending on goods and services and giving less money to state owned enterprises or statutory corporations.

They also suggest improving expenditure and payment control, reducing public sector cross debts, and strengthening oversight of state-owned enterprises.

The IMF recognized that funds from the citizenship by investment program are helping the situation but warned the extra money should not encourage the government to loosen plans to sort out its poor financial situation.

The fund says on current policies, economic growth would remain moderate and the fiscal situation would improve but cash flow problems would persist and the debt situation could become even more unsustainable.

The directors threw their support behind continued efforts to attract foreign investment but overall they say they remain concerned that under current policies, the country’s ability to repay the Fund may be at risk.

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