57857 September 2010 Maldives Economic Update Economic Policy and Poverty, and Finance and Private Sector Team South Asia Region The World Bank Maldives Economic Update1 September 2010 Overview The rebound in tourism experienced since August 2009 seems to have been sustained, auguring well for a sizeable recovery this year from the slump of 2009. Despite having posted better-than-expected fiscal results in the first half of the year, the country will be hard-pressed to sustain this in the medium term. However, despite the challenges, the government remains steadfastly committed to fiscal consolidation. Monetary policy has been made more conducive to sustaining both domestic stability and external stability. Inflation pressures remain modest, with the introduction of non-monetary financing of the deficit. However, the country's turbulent political environment persists, complicating forecasts of future outcomes. The ambitious task of fiscal consolidation and the establishment of macro stability requires much political bi-partisanship and corporation. 1 Prepared by Francis Rowe, Kirthirsri Rajatha Wijeweera, Susan Razzaz and Daminda Eymard Fonseka. 1 Economic Developments Rebound in tourism spurs rebound in GDP growth in 2010 Tourism rebound gathers pace. Tourist arrivals have continued the strong rebound that started in the second half of 2009. Arrivals were up 29 percent (year-on-year) in July, bringing total arrivals for the first seven months of the year to almost 440,000 ­ a record number for that point in the year (Figure 1). Tourist arrivals growth in Maldives fell less sharply than the global average during the crisis and is rebounding more strongly in 2010. A similar pattern was observed after the terrorist attacks of September 11, 2001 in the U.S. that interrupted global tourism in 2001 and 2002. We expect over 10 percent growth in arrivals this year (Figure 2). 90,000 Figure 1. Tourist Arrivals 40 Figure 2. World Wide Tourist Arrivals 80,000 (% change) 30 70,000 25 60,000 20 20 50,000 10 15 40,000 10 30,000 0 20,000 5 -10 10,000 0 - -20 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 -5 2007M1 2007M5 2007M9 2008M1 2008M5 2008M9 2009M1 2009M5 2009M9 2010M1 2010M5 -10 World Tourist Arrivals Maldives Arrivals Source: MMA Tourist Arrivals No - Left Axis Tourist Arrivals Growth - Right Axis (%, yoy) Source: WTTC data The rebound in tourism will help drive a rebound in economic growth this year. The increasing number of arrivals is likely to result in an increase in the total number of bed-nights for 2010, despite a marginal drop in the average-duration-of-stay. Occupancy rates, on the other hand, are down relative to previous years, which is due Figure 3. Tourist Arrivals Composition in part to added capacity this year. These indicators imply 2007 2010 (Upto August) a rebound in real GDP growth this year to about 4 percent from the 3.1 percent 5% 5% 6% contraction experienced in 14% 2009. In 2010, a significant 16% change in the composition of 14% arrivals was witnessed with 66% 73% arrivals from high-income countries receding in relation to arrivals from fast-growing emerging countries ­ notably Europe Asia excl. China China Others Europe Asia excl. China China Others China (Figure 3). Indeed, in recent times China has emerged as the largest tourist source for the Maldives, surpassing the UK. 2 Decline in fisheries also helps explain modest Figure 4: Contribution to Real GDP Growth growth rebound. The fishing industry is a distant (percentage points) second to tourism (3 percent compared to 30 20 percent) in its contribution to GDP, but is the 15 second-largest foreign exchange generator and an 10 important employer. Fish-catch levels have declined continuously since 2006, falling an 5 additional 22 percent in 2009. The causes of the 0 drop in fish-catch are poorly understood, but may be 2002 2003 2004 2005 2006 2007 2008 2009 2010 related to changing ocean currents and rising costs -5 of fuel in recent years. The fish catch declined by -10 25 percent during Jan-July 2010, while fish purchases by commercial buyers dropped by 13 -15 Fisheries Construction Tourism Government Administration Other percent. The volume of fish exports during Jan-July Source: MMA 2010 also fell by 8 percent. Consequently, earnings from fish exports declined by 5 percent, to US$36.7 million during Jan-July 2010, despite the higher tuna prices in the international market, as such, we expect a small negative contribution to real GDP growth from the fisheries sector this year (Figure 4). Fiscal Consolidation remains the foremost challenge in the coming years Early indicators point to a better-than- 70 35 Figure 5. Government Finance ( percent of GDP ) expected fiscal performance in the first seven months of the year. Preliminary fiscal data 60 30 made available by the authorities in July 2010 50 25 indicate that the fiscal deficit (after grants) 40 20 reached Rfy 1.68 billion, against a budgeted target of Rfy 1.94 billion, and an actual of Rfy 30 15 2.26 billion achieved during the same period in 20 10 2009. Based on straight line projections, the position as of July indicated a fiscal deficit 10 5 equivalent to 15.5 percent of GDP, against a 0 0 target for the year of 18.2 percent of GDP. The 2004 2005 Total revenue and grants 2006 2007 2008 Total expenditure and net lending 2009 2010 Overall deficit-Right Axis improved performance in 2010 has been achieved Source: MMA despite a below-budget revenue outturn. Total expenditure (inclusive of net lending) during the first seven months of the year amounted to Rfy 5.25 billion, against a target of Rfy 6Bn, due largely to a cut-back of non-salary operating expenses2 and capital expenditure. The total revenue3 outturn during the first seven months of the year (of Rfy 3.6Bn) was about 10 percent above the comparative period in 2009 ­ but still 12 percent below budget. For example, import duty collection during the period recorded only a marginal 6 percent increase over that of 2009, despite an import growth (in value terms) almost double that size. Similarly, the tourism tax receipts recorded an 11 percent increase over those of 2009, despite a more than 15 percent growth in tourist bed nights4. 2 Mainly items such as travel expenditure, and repairs and maintenance expenditure. 3 Inclusive of grants. 4 The relevant base for the tourism tax. 3 Fiscal Accounts - Rfy millions (unless otherwise stated) Memo 2010 (Act) 2010 (Bud) Variance Budget Jan-July Jan-July (%) 2010 TOTAL REVENUE AND GRANTS 3,569.14 4,071.67 -12.3% 6,980.00 Revenue (excl. privatization receipts) Tax revenue 1,563.30 2,031.65 -25.4% 3,482.84 Import duties 1,119.94 1,163.08 -3.7% 1,993.85 Tourism tax 353.15 453.08 -22.1% 776.7 Other 90.22 415.51 -78.3% 712.3 Nontax revenue 2,005.84 2,040.19 0.7% 3,296.82 SOE profit transfers 647.84 314.83 105.8% 539.70 Royalties, land & resort rent 767.04 1,086.90 -29.4% 1,863.25 Other 590.96 521.42 13.3% 893.87 Grants 2.68 117.04 -97.7% 200.65 EXPENDITURE AND NET LENDING 5,249.92 6,014.04 -12.7% 10,309.78 Current expenditure 4,383.81 4,977.72 -11.9% 8,533.23 Of which: Salaries and allowances 2,418.10 2,361.33 2.4% 4,048.00 Capital expenditure 489.20 1,180.70 -58.6% 2,024.05 Net lending 376.91 (144.38) -361.1% -247.50 OVERALL BALANCE (1,680.77) (1,942.37) -13.6% (3,329.78) OVERALL BALANCE, EXCL. GRANTS (1,683.45) (2,059.42) -18.4% (3,530.43) Sources: Public Accounts Department, Ministry of Finance, IMF and WB staff estimates. Note: (1)Data from the PAD has been restated to conform to GFS standard by excluding capital items (sale of assets) from revenue, while grants have been included as a revenue item. (2) Unless otherwise obtained separately (where available), the period budget for line items has been calculated on a `straight line' basis from the annual budget. The government remains committed to fiscal consolidation. One of the government's main achievements has been to maintain the public sector pay cuts introduced last year5, despite a civil court ruling to restore wages in May 2010. The government's appeal to the Supreme Court was still pending at the time of this writing. However, it is highly likely that the forthcoming budget for 2011 will restore the civil service salaries to previous levels6. In another positive fiscal development, the government passed the Tourist Goods and Services Tax (TGST), approved by the House on August 26, together with the Second Amendment to the Tourism Act, which seeks to replace the existing resort lease rent with a land rent (see box below). The TGST was signed into law by the President on September 8. The TGST will impose a 3.5 percent ad-valorem tax on all tourist spending and will come into effect on January 1, 2011. Progress on rightsizing the public sector has been slower than envisaged. While the transfer of employees to corporatized entities has made some progress, the planned (direct) redundancies have not been carried out to any significant extent. Although associated public sector workers have been transferred to the corporatized entities, they remain indirectly within the payroll of the government ­ as these entities7 are not sufficiently revenue generating, resulting in their being reliant on budgetary transfers from the government. 5 The only reversal of the salary cuts undertaken in September 2009 was for the staff of the independent commissions, whose salaries were restored by the Majlis with the passing the 2010 budget. The salary reversions became effective from January 1, 2010. 6 If civil service salaries are restored salaries of the uniformed personnel and political appointees will also be simultaneously restored -, thus completely reversing the pay cuts for all categories of public sector workers. 7 Who remain as government owned entities. 4 Maldives Tourism Goods and Services Tax (TGST) On August 26, the People's Majlis of the Maldives passed two important laws relating to the tourism sector: (a) the Tourist Goods and Services Tax (TGST), and; (b) the Second Amendment to the Tourism Act. The Bills were subsequently ratified by the President of Maldives on the September 8. The TGST An ad-valorem tax on tourism was a long-felt need in the country. Prior to its adoption, much of the tourism-related fiscal revenues were earned from a flat, per-unit "bed tax" of $8. Under the new legislation, tourism-related goods and services will be taxed at a rate of 3.5 percent. The sectors and services coming under the new tax are: 1. Room rates charged by resorts, hotels, picnic islands, and guest houses. 2. Room and bed rates charged by tourist vessels. 3. Other goods and services sold to tourists from resorts, hotels, guest houses, picnic islands and tourist vessels 4. Goods and services sold to tourists from diving schools, shops, spas, and water sports facilities in tourist resorts, hotels, guest houses and tourist vessels. 5. Travel planner charges. 6. Domestic transportation fares for tourists. The new tax will take effect from January 1, 2011, and will exist side-by-side with the "bed tax" through 2013. In 2014, the bed tax is scheduled to be removed and the TGST (which itself is earmarked to be coalesced with the GGST) rate raised to offset the revenue lost from removal of the bed-tax. The Land Tax The Second Amendment to the Tourism Act stipulates that the new rent structure be charged on tourist resorts, tourist hotels and tourist guest houses, at these rates: For areas 200,000 square feet in extent the rent charged would be US$ 1Mn per annum; For areas 200,000 < x 400,000 the rent applicable would be US$ 1.5Mn per annum, and; For areas > 400,000 square feet, the rent applicable will be US$ 2Mn per annum No estimates have been made to date as to the likely effect of the changes but it is likely that the new scheme will generate lower revenues than the current scheme. Resort lease rentals are one of the principal sources of revenue for the government, accounting for almost 20 percent of total revenue, although they have been highly volatile. Other developments during the first half of the year are likely to add to fiscal pressures in the coming period. In May 2010, the government promised to absorb the 7 percent employee contribution to the pension fund in the public sector ­ as partial compensation for the earlier wage cuts. This measure would likely result in an additional Rfy 94 million (or 0.5 percent of GDP) in expenditure over the remaining seven months of the year. The concession is time-bound, however, and is likely to be reversed if the salaries are restored. The Decentralization Bill passed by the House in July is likely to result in an additional layer of government, incurring additional expenditure. The bill aims to establish about 800 new island and atoll councilors8. Under the legislation, the new councilors would have administrative and executive responsibilities and would form part of the broader public service9. It is estimated that the new structure will cost the government an additional Rfy 173 million (or 1 percent of GDP). 8 Scheduled for December 2010. 9 In addition, existing island and atoll administrators, who come under purview of the Ministry of Home Affairs, will also continue parallel to operate, thereby creating an overlap of function and cost. 5 On the revenue side, despite passage of the TGST Bill, the delay in passing the Business Profits Tax (BPT) will hurt the fiscal position10. The budget for 2010 anticipated the BPT coming on stream from the January 1, 201011 ­ with the Bill being passed in December 2009. The authorities tried again in May 201012 to pass the legislation ­ but again were unable to do so. The government now hopes that the Bill will be taken up in October ­ with the earliest likely start date being the beginning of the 1Q11. The government has also earmarked a broader-based General Goods and Services Tax (GGST), spanning all goods and services sold in the country, to take effect in 2013. The GGST would replace the TGST, with the latter then absorbed into the broader tax system. The deficit financing in 2010 is likely to be weighted more on domestic sources, with the expected shortfall in privatization receipts. The budget for 2010 anticipated a domestic financing requirement of 47 percent of the overall deficit in the anticipation of sizeable privatization inflows, particularly through the Male International Airport (MACL). However, with the subsequent decision by the government to replace the privatization with a concession agreement (see box), domestic financing may have to play a greater role. Maldives Airport Privatization In the face of considerable political opposition, the government backed down on its earlier plan to privatize the Male International Airport. In mid-2009, it called for expressions of interest (EOI) for a concession to carry out the rehabilitation, expansion, operation and maintenance of the airport for 25 years (with a possible 10-year extension). Three bids were received, from GMR-Malaysian Airlines, GVK of India, and TAV of Turkey. Based on superior NPV of cash flows, the GMR-led consortium was awarded the contract, which was signed on July 24. Under the contract, the GMR-led consortium is expected to carry out the core development work, which includes building a 45,000sqm, integrated passenger terminal and a 2,400sqm VIP terminal, together with relevant landside development and land reclamation. As part of the agreement, the government would receive an upfront payment of US$ 78 million (most likely to be realized next year), while fixed annual concession fees amounting to US$ 1.5 million per annum would also be paid thereafter. In addition, other variable cash flows would also accrue to the government, based on fuel sales and gross revenues (or sales). The total project outlay is estimated to be US$ 511 million, of which roughly US$ 380 million will be raised through a consortium of banks. Monetary and exchangerate policy has moderated nearterm vulnerabilities Monetary policy in Maldives has undergone a transformation. Deficit monetization (mainly through the `Ways and Means Account' of the Maldives Monetary Authority (MMA) and direct unsecuritized advances by the MMA) was stopped from September 2009, and proper treasury auctions commenced from December 2009. Interest rates are market determined. The MMA also commenced its Open Market Operations (OMO) in August 2009, and this has been carried out successfully, draining much of the excess rufiyaa liquidity in the system. 10 The shortfall in BPT together with shortfall in proceeds from the airport service charge and the bank profits tax was responsible for the sharp shortfall in other tax revenues shown in the Fiscal Accounts table. 11 With planned income of Rfy 300 Mn for the year. 12 Just before parliament entered recess. 6 Figure 6. Treasury Bill rates ( % ) Figure 7. Open Market Operations ( % ) 6.50 5.50 6.00 5.00 5.50 4.50 5.00 4.00 4.50 3.50 4.00 3.00 Source: MMA 28 days 91 days Source: MMA Weighted average interest rate Primary market operations for government securities has seen a progressive decline in yield rates while maturity profiles of the securities on offer has also been extended. With the end to deficit monetizing, the MMA has been assisting the government to further broaden the base of the domestic T- bill market ­ and in July the existing portfolio of government securities was augmented with the introduction of the 182-day T-bill13. The weighted average T-bill yields have fallen since the auction system was introduced in December 2009 with bids put on offer subscribed to by the market participants ­ principally the commercial banks and some state owned organizations14. In parallel, the MMA has continued its successful mopping up of excess liquidity through the system with the OMO. The OMO rates also show a progressive decline from the beginning of 2010. Net credit outstanding to the government from the MMA has dropped, thereby reaching the target of the IMF program for end-August. Inflation remains subdued despite the recent Figure 8. Inflation ( %, yoy ) spike in global food and commodity prices. 20 Headline inflation in the Maldives has been increasing since its nadir in mid-2009, due 15 mainly to cost-push factors caused by the 10 gradual recovery in global commodity prices. Yet national headline inflation remains benign 5 and in single digits. August headline inflation was 6.3 percent (y-o-y), compared to 6.9 0 percent in July. Since the onset of the global -5 economic crisis, inflation at the atolls - 2007M1 2007M5 2007M9 2008M1 2008M5 2008M9 2009M1 2009M5 2009M9 2010M5 2010 M1 traditionally higher than in the capital Male, dropped to below the capital's rate, and in August recorded just 4.4 percent, from 5 Atolls Male percent in July. Male's headline inflation, meanwhile, was substantially higher at 8.2 percent. The gap is due to the difference in the CPI baskets; the atoll's (and consequently the national CPI) basket tends to place more weight on food than Male's. A comparison of global commodity prices shows faster recovery in non-food commodities than those of food, which explains to some extent the disparity between the atoll and Male inflation. 13 Hitherto only the 28-day and the 91-day Tbill was offered to the market. 14 MMA has not been subscribing to any Tbills put on the auction. 7 Forex Reserves declining from peak reached in April 2010. The onset of the tourist low season Figure Gross International Reserves Figure 9.10. Gross International Reserves 340 4.2 during the 2nd and 3rd quarters of the years coupled 320 with other cyclical events such as the Haj pilgrim 3.7 300 season and the onset of school holidays - which 280 normally result in increased outflow of foreign 3.2 260 exchange has shown up in falling reserves. The 240 development has also heightened activity in the 2.7 220 parallel market - which has been mostly subdued 200 2.2 earlier. However, in step with the depreciation of the 180 US$, the rufiyaa has depreciated against several 160 1.7 currencies (notably the Japanese Yen, the Singapore 2008m5 2008m8 2009m2 2009m5 2009m8 2010m2 2010m5 2008m11 2009m11 Dollar and the Indian Rupee), except for the euro. As for the euro, the rufiyaa had appreciated by 13 USD million - Left Axis Months of imports-Right Axis percent by the end of August. Pressures on the fixed Source: Maldives Monetary Authority ex rate regime are subdued for now. Private sector credit remains subdued, though recent indicators hold a glimmer of hope. Total private sector credit (PSC), which has been Rfy Mn Figure 9. Credit Growth Figure 10. Credit Growth % contracting since the onset of the GFC continues 18,000 35 to remain subdued. PSC contracted by 4 percent 16,000 30 in 2009 and continued to stagnate, contracting a 14,000 25 further 1 percent by July 2010 (from end 2009). 12,000 10,000 20 Business sentiment remains subdued, with work 8,000 15 on resort construction having hit a snag, and the 6,000 10 domestic banking system not showing 4,000 2,000 5 enthusiasm for credit expansion. By month-on- - - month terms, July recorded the fastest growth in 2008M1 2008M5 2008M9 2009M1 2009M5 2009M9 2010M1 2010M5 PSC for nearly 20 months ­ 1.5 percent ­driven mainly by credit to the resort sector. It may be a Credit to Public Sector Credit to Private Sector while before the PSC shows a sustained sign of Public Sector Credit to Total domestic credit - % recovery, with the global conditions still weak. Source: MMA Despite tourism's rebound, current account deficit widens The immediate post-crisis era has resulted in a growing trade deficit. The BOP position improved significantly in 2009 in the wake of the global financial crisis, with a faster contraction in imports relative to exports, and with tourism receipts contracting only marginally. The current account deficit improved to 30.8 percent of GDP (or US$ 402.9 million) in 2009, from nearly 52 percent of GDP (or US$ 647.3 million) in 2008, while the overall balance recorded a surplus of US$ 20 million, compared to a deficit of US$68 million in 2008. With the gradual recovery from the global crisis, import prices have risen ­ contributing to a widening of the import bill and the trade deficit. During the first seven months of 2010, total import growth (12.3 percent) outstripped export growth (nearly 9 percent), and resulted in a widening of the trade deficit to US$ 506.5 million ­ 13 percent higher than in 2009. If global commodity price growth does not accelerate, the trade deficit is likely to remain manageable during the rest of the year, and coupled with higher inflows from tourism,15 the overall current account deficit is expected to narrow further in 2010 to 27 percent of GDP. 15 Estimated at nearly US$ 700Mn for the whole year. 8 Financial flows are likely to be much lower than anticipated, owing to the non-materialization of privatizations, while foreign aid is also likely to flow slowly. Private capital flows are unlikely to be substantial this year, with the likelihood of the earmarked cash-flows from the airport modernization project not being realized. The Maldives Partnership Forum, which concluded successfully in March 2010, generated aid commitments amounting to US$ 313 million ­ and subsequently increased to US$ 400 million. However, it appears that these aid commitments are being disbursed slowly, with much of the actual flows likely to materialize next year. Mediumterm outlook remains positive but vulnerable The strong rebound in tourism and government policy actions have helped reduce macroeconomic imbalances and re-accelerate economic growth. However, policy challenges and vulnerabilities remain, which have to be carefully managed if the recent positive developments are to be maintained. Two risks to the outlook stand out: The fractious political environment. The political crisis that erupted over the summer has subsided, but remains a key risk. Reconciliation efforts between the ruling MDP and the opposition-led parliament are being attempted through consultations brokered by the UN. The cabinet, which resigned en masse in late June, still has not been ratified by parliament, but ministers are continuing their day-to-day business. The calm in the crisis may be explained by a number of factors ­ parliament is currently in recess and attempts at reconciliation are ongoing. Only successful reconciliation seems likely to ensure a less destructive political climate. Accelerating international commodity prices. Maldives is one of the most open economies in the world, largely because imports are so significant (over 90 percent of GDP in 2009). Food and fuel products make up almost 60 percent of imports and comprise 40 percent of the CPI basket. The recent rise in international food and fuel prices, therefore, raises concern that the current account deficit may widen more than expected in 2010 and put pressure on foreign exchange reserves. Rising international commodity prices will also feed through to consumer price inflation, which will cause the REER to appreciate and again destabilize the exchange rate peg. One positive aspect of the rising value of commodity imports is that fiscal outcomes could improve, if planned expenditure cuts are implemented, since 30 percent of government revenues come from import duties. 2000=100 Figure 11. Agricultural Prices $ / bbl Figure 12. Average Oil Prices 350 160 140 300 Raw Materials 120 Beverages 250 100 200 80 150 60 Food 40 100 20 50 0 0 2005M1 2006M1 2007M1 2008M1 2009M1 2010M1 Source: Global Economic Monitor, World Bank Source: Global Economic Monitor, World Bank Source: World Bank Development Economics Prospects Group. 9 World Bank Assistance to Maldives in FY11 World Bank staff completed a progress report on implementation of the Bank's Country Assistance Strategy (CAS) in May 2010. It aims to better support the government's implementation of the Strategic Action Plan and other key CAS objectives. The Bank currently has three investment projects in the country, a pension project, approved by the Bank's board in mid-May, and the recently-approved Economic Stabilization and Recovery credit: A mobile-phone banking project, requiring US$7.7 million, was approved in April 2008. The project is designed to improve access to financial services by creating a single-currency payment system for mobile telephone-based accounts, enabling subscribers to transfer funds to and from bank accounts, and to and from telephone-based accounts; An integrated human development project, requiring US$15.6 million, was approved in May 2004. The objectives of this project are to: (i) improve social outcomes and promote economic growth by strengthening the delivery of social services (education, health and nutrition services); (ii) reduce poverty and promote regional equity by strengthening social service delivery and increasing economic opportunities in atolls remote from the prosperous Male region, and; (iii) promote ecologically-sustainable development by concentrating services and populations on ecologically- viable islands within these atolls; An environmental management project, requiring US$13.2 million, was approved in May 2008. The main aim is to provide the Maldives with the capacity to manage environmental risks and threats to fragile coral reefs and marine habitats resulting from tourism development, increased solid-waste disposal, fisheries and global climate change. The project has two development objectives, to: (i) establish a solid-waste management system for inhabitants on targeted islands, reducing the risks of contamination associated with accumulated wastes and sea dumping, and; (ii) train people for environmental management; A pension project, requiring US$3.8 million, was approved in May 2009. The primary objective is to support the introduction of a new pension system comprising two elements ­ one contributory and the other non-contributory ­ in order to provide income protection for aged citizens. A secondary objective involves rationalizing the public administration by introducing a sustainable retirement scheme for civil servants. The project will seek to protect retirees from a decline in consumption, and lay the institutional and administrative groundwork for other social protection programs, and; An economic stabilization and recovery credit was approved on March 4, 2010. The development policy credit aims to support the government's program to stabilize the economy, and puts in place some of the key elements needed for a sound recovery. There are three main areas of the government's reform plan that this proposed operation will support: (i) public financial management, specifically budget preparation, implementation and monitoring; (ii) public enterprise reform, specifically to help ensure that the government-planned PPPs appropriately minimize future fiscal risks to the government, and; (iii) social protection, specifically to support the government's effort to lay the foundations for a harmonized national social protection system. The credit was processed under the IDA Financial Crisis Response Fast-Track Facility. 10 Maldives - Key Economic Indicators Actual Estimate Projected Indicator 2007 2008 2009 2010 2011 2012 National accounts (as % of GDP) Gross domestic product 100 100 100 100 100 100 Agriculture 7 6 8 9 9 10 Industry 17 18 23 25 27 29 Services 76 76 69 67 64 61 Total Consumption .. .. 97 90 86 79 Gross domestic fixed investment .. .. 21 21 21 21 Government investment .. .. 12 11 9 9 Private investment .. .. 9 10 12 12 Exports (GNFS)b 83 83 73 72 74 80 Imports (GNFS) 104 110 94 87 84 82 Gross domestic savings .. .. 3 10 14 21 Gross national savings .. .. -5 2 8 16 Memorandum items Gross domestic product 1055 1261 1338 1441 1552 1669 (US$ million at current prices) GNI per capita (US$, Atlas method) 3190 3580 3690 4090 4470 4770 Real annual growth rates (%, calculated from 95 prices) Gross domestic product at market prices 6.6 5.2 -3.0 4.0 5.0 6.0 Gross Domestic Income .. .. .. .. .. .. Real annual per capita growth rates (%, calculated from 95 prices) Gross domestic product at market prices 4.9 3.5 -6.3 1.5 1.8 1.9 Balance of Payments (US$ millions) Exports (GNFS)b 877 1034 981 1042 1150 1329 Merchandise FOB 228 330 313 333 356 399 Imports (GNFS)b 1234 1570 1260 1248 1297 1374 Merchandise FOB 965 1221 1124 1120 1167 1237 Resource balance -357 -535 -279 -206 -147 -45 Net current transfers -14 -52 -55 -55 -55 -55 Current account balance -438 -651 -395 -320 -252 -139 Net private foreign direct investment 15 15 5 15 15 20 Long-term loans (net) .. 0 70 40 -7 -15 Official 27 37 35 44 5 -2 Private .. -37 35 -4 -12 -13 Other capital (net, incl. errors & ommissions) .. 568 400 350 300 225 Change in reserves -77 68 -81 -86 -56 -91 Public finance (as % of GDP at market prices)e Current revenues 48.1 44.3 39.0 40.3 40.2 40.3 Current expenditures 48.6 51.3 54.2 48.0 42.5 38.2 Current account surplus (+) or deficit (-) -0.5 -7.0 -15.2 -7.8 -2.4 2.1 Capital expenditure 12.1 11.4 12.3 10.7 9.2 8.6 Foreign financing 12.3 8.5 2.2 1.5 -1.4 -1.6 Monetary indicators M2/GDP 32.6 37.7 78.1 80.0 82.6 82.6 Growth of M2 (%) 18.8 38.1 120.1 10.2 11.3 7.5 Private sector credit growth / 93.4 67.2 97.7 93.0 93.0 93.0 total credit growth (%) Real interest rates Consumer price index (% change) 6.8 10.0 7.4 6.4 4.5 4.8 GDP deflator (% change) 6.6 13.6 11.0 4.0 3.8 3.5 a. GDP at factor cost b. "GNFS" denotes "goods and nonfactor services." c. Includes net unrequited transfers excluding official capital grants. d. Includes use of IMF resources. e. Consolidated central government. f. "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation. 11