Fiscal success in FY15/16, but tougher challenges await

As attention turns to the government’s FY16/17 budget announcement on 29^th February, the finance ministry can look back on what appears to have been a successful FY15/16. We think that this year’s fiscal target will be met, and there has been evidence of a rise in public investment. But greater challenges await. In particular, the finance ministry will have to make room for a large pay rise for civil servants while continuing to tighten fiscal policy.