FY 1992 ESF : trade and investment II PAAD

The program will consist of a single cash transfer of $20 million, which will be used to finance private, and possibly, public sector imports from the United States. Local currency generations will be used to reduce the deficit of the Central Bank. Conditionality will address the areas of macroeconomic stabilization, liberalization of the foreign exchange regime, trade liberalization, and public sector efficiency. Key targets are to: (1) reduce the public sector deficit (including Central Bank losses) from about 2.0% of the GDP in 1991 to not more then 1.0% in 1992; (2) abandon the "crawling peg" mechanism for determining exchange rates in favor of a market determined exchange rate, liberalize the capital account of the balance of payments by 6/92, permit private banks to issue dollar- denominated certificates of deposit, permit public banks to open dollar-denominated checking accounts and make dollar-denominated loans, and permit all banks, financerias, exchange houses, and members of the stock exchange to trade in foreign exchange; (3) gradually reduce to 20% the tariff on shoes, textiles, and clothing by 12/94 and on all other goods by 6/93; (4) pass legislation to rationalize exonerations and protect intellectual property rights; (5) reduce public employment by 3,500 in 1992; and (6) restructure public institutions in the transport and agricultural sectors.