Consumer and business sentiment have firmed up and financial conditions have continued to improve. Adjustments in administered prices have pushed inflation to 5.8 percent in March, compared to 4 percent at end-2009, but underlying inflation has remained stable close to 4 percent. Overall, the rebound in activity has been stronger than originally anticipated.

“The economic outlook has also improved since the previous review in December 2009. The projection for output growth in 2010 has been revised to 3.8 percent (1.5 percentage points higher than before). Inflation is expected to be close to the upper end of the central bank’s target band of 4–6 percent in 2010.

“Performance under the precautionary SBA with the Fund has continued to be very strong, as the authorities met all quantitative performance criteria for end-December 2009 and preliminary data suggest that the end-March targets were also met.

“Overall, the authorities’ policy response to the crisis, supported by Fund’s SBA, has proved effective. The government’s strategy to shield the economy from external shocks with external resources, which in the event were not used, helped preserve confidence, maintain stability, and protect the most vulnerable groups. A supportive fiscal policy has provided a boost to the recovery and a cautious monetary policy has allowed inflation to move to low levels.

“The mission expects that the IMF Executive Board will consider the third and final review of the SBA in late-May 2010. The authorities have indicated that they will continue to treat the SBA as precautionary.”

Source: International Monetary Fund

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