assessment of the socio-economic and environmental impact

1. The Macroeconomy
Overview of Domestic Policies
The fiscal policy for 2007/08 was established within the context of the revised Medium Term
Socio-Economic Framework 2006/07–2009/10 (Table 6.2). Some key macroeconomic targets
that were established for FY 2007/08 included:
• inflation of 6.0–7.0 per cent;
• real GDP growth of 3.0 – 4.0 per cent;
• fiscal deficit of 4.5 per cent of GDP;
• debt to GDP ratio of 125.1 per cent; and
• Primary Surplus of 8.5 per cent of GDP.
Table 6.2: Medium Term Economic Indicators 2002/03 – 2009/10
INDICATORS
Actual
Targets
2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10
Real GDP Growth Rate 1.7 2.1 0.4 1.9 2.5 3-4 3-4 4-5
(%)
Inflation (%) 6.2 16.8 13.2 114 6.6 6-7 5-6 4-5
Fiscal Balance (% GDP) -7.6 -5.6 -4.6 -3.3 -5.3 -4.5 -2—3 0.0
Primary Surplus 7.2 12.5 11.8 10.4 8.5 8.5 9-10 10-11
(% GDP)
Debt/GDP (%) 143.9 142.5 136.6 131.5 130.4 125.12 119.91 110.89
NIR
1,339.7 1,568.7 1,901.6 2,078.1 2,329.3 2,131.9 2,181.9 2,232.0
(US$ million)
Source: Ministry of Finance & Planning
The fiscal targets were to be achieved through the Government’s continued utilization of a
combination of aggressive revenue enhancement measures and more efficient utilization of
expenditure.
The Expenditure Budget for FY 2007/08 was set at $380.4 billion, an increase of $10.3 billion
compared with the revised estimates for FY 2006/07. Debt Servicing at $203.8 billion accounted
for 53.6 per cent of the total FY 2007/08 budget compared with $219.3 billion or 59.3 per cent
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