However, the government has taken corrective measures and is accelerating the pace of reforms under the new program. Economic and financial developments in 1999 and early 2000 were broadly in line with the program. In spite of a drop in cotton production, real GDP growth is estimated to have risen to about 5 percent in 1999 from 4.5 percent in 1998, and is projected to increase to 5.6 percent in 2000, with cotton production estimated to increase by 8 percent. The objectives are to achieve real GDP growth of 5-6 percent and contain inflation below 3 percent. The external current account deficit is expected to widen by a 1.5 percentage point of GDP to just over 7 percent in 2000 before narrowing to 5.5 percent of GDP the following years.
Fiscal policy is geared toward maintaining a balanced overall fiscal position, including grants.
It focuses on improving tax administration and public resource utilization, and provides for increased budget appropriations for programs to reduce poverty and develop human capital. The government has continued to reduce domestic arrears in line with the program, settling the equivalent of 0.8 percent of GDP in 1999. It is further preparing a plan for settling remaining arrears over the next few years. On the expenditure side, the goals are to ensure that actual spending reflects the government priorities for the social sector and infrastructure. The government is also taking action to improve the efficiency of tax administration and to reduce tax fraud and corruption.