Economic outlook and fiscal budget

A single budget cannot resolve all structural issues but it can take corrective steps.

Against the backdrop of disappointing national accounts estimates recently released by the National Statistics Office (NSO) and an unsatisfactory fiscal performance but improving external sector situation so far this year, the government is busy preparing the budget for the next fiscal year 2023-24. While tight monetary and fiscal policy measures mitigated external sector risks, particularly the fast-depleting foreign exchange reserves, they also squeezed aggregate demand as banking sector lending slowed, industrial capacity utilisation decreased, and revenue mobilisation shortfall widened as obligatory spending on salaries and social spending increased. It indicates a weak economy with unresolved structural issues and macroeconomic imbalances, which the upcoming budget must focus on.