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According to the IMF, economic growth slowed to 0. Growth rebounded in and reached 3. Inflation for the year averaged 2. However, the outlook is clouded with considerable uncertainty arising from the sharp increase in international commodity prices—especially for oil, fertilizer, and foodstuffs—accentuated by the war in Ukraine, and tightening conditions in international financial markets.
Average inflation is expected to rise to 4. The authorities are committed to a fiscal policy anchored on a gradual reduction of the deficit and are revising the budget to maintain the deficit cash basis, including grants at 2. This should bring the stock of public debt down to around 44 percent of GDP by end It added that the impact of higher international oil prices on the budget is mixed as the higher oil revenues are more than offset by substantially higher fuel subsidies estimated at 2.
The higher subsidy costs are therefore being accommodated by reducing other spending, including spending on investment projects. The high cost of fuel subsidies would be difficult to sustain under current international oil price projections.
However, the gradual phasing out of fuel subsidies would need to be accompanied by a substantial scaling-up of the social cash transfer mechanism. Also, the medium-term outlook remains positive, though facing considerable uncertainties.
