IMF hails fiscal consolidation, monetary policy tightening in Poland.

By bne IntelliNews July 11, 2011
Directors of the International Monetary Fund (IMF), upon concluding their mission in Poland, have welcomed the substantial fiscal consolidation that is already under way. However, given the narrowing output gap and increased external vulnerabilities associated with the upward revision to the current account deficit, they considered that additional front-loaded measures will be necessary to lessen the burden of monetary policy and put debt firmly on a downward path over the medium term, the IMF has announced. Directors supported the authorities plan to adopt an expenditure-based fiscal rule, complemented by efforts to strengthen budgetary processes, tighten entitlement programs, and streamline the public administration. At the same time, the IMFs representatives welcomed the recent increases in the policy interest rate . They noted that some further gradual hikes in the policy rate are warranted to bring inflation back to target, while efforts should continue to improve monetary policy communication, the release reads. The funds representatives also noted that a gradual exchange rate appreciation could be considered as part of the policy mix to deal with a potential surge in capital inflows. tom
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