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MEFD July 2013

Published: Thursday September 12th, 2013

Domestic economic conditions remained challenging during the review month, reflecting continued weakness in the major tourism sector, which offset steady gains in capital formation provided by various foreign investment-led construction activities. However, with the spill-over effects remaining narrowly based, the impact on employment conditions was minimal. Price developments exhibited a slowing in inflation over the twelve-months to July, reflecting the pass-through effects of lower global oil prices. On the fiscal side, mildness in economic activity and the normalization of collections contributed to a downturn in tax revenues which, together with a rise in current spending, fostered a widening in the fiscal deficit during the eleven months of FY2012/13. In the monetary sector, both liquidity and external reserves trended moderately lower in July, amid some gains in private sector credit, with credit quality indicators registering mild improvement.

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