The year 1990 marked the beginning of a decade with a call for a broader scope and deeper intensity of policy reforms. The series of internal and external shocks experienced by the country in 1990 upset the macroeconomic balance which past stabilization efforts have intended to achieve to put the economy on sustainable growth path. These shocks include the severe natural calamities such as the earthquake and the drought, power shortages and the turmoil in the Middle East. Their adverse impact was manifested in the deterioration of the economic environment. A higher government deficit arising from the unexpected allocation of funds to alleviate the impact of these shocks and the faster implementation of development projects due to streamlined project implementation procedures contributed to the upsurge of inflation and interest rates. The shrinkage of export markets due to international uncertainties and the loss of the Middle East market led to the deterioration in the exchange rate. Higher oiI prices further fanned the fire of inflation resulting in macroeconomic imbalances . Thus, the economy suffered a decline in output growth and investment levels.

In 1988, the whole government machinery focused its efforts on sustaining economic recovery. The Department of Finance, being the main agency involved in the formulation and administration of financial and fiscal policies, geared its activities toward enhancing public sector resource mobilization and in promoting an environment conducive to private sector savings mobilization and investment.

Economic stabilization wqs the maior gul of the National Govemment in 1984. Duing the past year, the National Govemment geared all its policy tools totwrd the two-fold obiectives of dampening inflationary pressures and stengthening the country’s balance-of-payments position Thus, as of yearend 1984 inllation had decltned to 50.8 percent from 63.8 percent in October 19A. A balance-ofpayments surplus of $258 million was recorded in 1984 compared with the previous year’s deficit amounting to $2,068 million.

This report covers briefly the fiscal and administrative phasee of operations of the Department and its bureaus and offices from July 1, 1961 to June 30, 1962.