High hopes, a poor track record

The Cabinet has approved an austere draft budget for 2019 with total expenditure projected at $17 billion. The drastic measures taken to cut spending and boost revenues aim to reduce the deficit-to-GDP ratio to 7.6 percent from the 11.2 percent of GDP realized in 2018. The Cabinet’s approval of the draft budget, which still needs Parliament’s ratification, sent a positive signal to the capital market that resulted an improvement of the prices of the country’s sovereign bonds.

A HARD TARGET

Cutting the fiscal deficit to 7.6 percent of GDP is in line with the government’s commitment at the CEDRE donor conference to lower it by one percent on an