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The IMF has endorsed Australia’s economic management and applauded the

Government’s plan to reform the tax system.

The endorsements are contained in the summary of the IMF’s latest review of the

Australian economy, issued today (attached). The Executive Board of the IMF is strongly

supportive of the Government’s economic policies and structural reforms, including

what the IMF describes as a ‘landmark tax reform package’ and more recent

business tax reforms.

In particular, the IMF Executive Directors have highlighted the Australian

economy’s ‘extended period of strong non-inflationary growth, and the remarkable

resilience of the economy in the face of the Asian crisis’. They also noted that this

performance reflected the ‘sustained commitment to sound macroeconomic policies and

ongoing structural reforms’.

Looking ahead, the IMF Board considers that the economic outlook remains very

favourable with continued robust economic growth, inflation remaining under control and a

narrowing of the current account deficit.

The IMF Board welcomed the extensive tax reform that is under way, described by the

Fund as a ‘landmark tax reform package’, noting that it will ‘improve the

integrity and fairness of the tax system and reduce its complexity’.

The IMF Executive Directors also highlighted the contribution that progress in

structural reform had made to the pick-up in productivity growth. Analysis by IMF staff

suggests that structural reforms have raised Australia’s sustainable productivity

growth, thereby enhancing the growth potential of the economy. The Board considered that

sustained implementation of the structural reform agenda is necessary to build on this

performance.

The Government welcomes the IMF’s endorsement of its policy settings. The

Government recognises that maintaining Australia’s recent strong economic performance

will require continued adherence to sound macroeconomic and structural policies.

Under Article IV of the IMF’s Articles of Agreement, the IMF reviews each

member’s economic developments and policies. This review is normally conducted every

year. The Public Information Notice issued by the IMF today summarises the main features

of the IMF Executive Board’s discussion of the Australian economy on 28 January 2000.

CANBERRA

16 February 2000