DJIBOUTI, April 4 (Reuters) - Djibouti's economy will expand 4.8 percent this year from 4.4 percent in 2011, driven by an acceleration of port activities, construction and services, the International Monetary Fund said on Wednesday.
The rate of inflation in the tiny Red Sea state is expected to slow to 4.3 percent in 2012 from 5.1 percent last year, when rising global food and oil prices hurt the import-dependent nation.
"The short-term challenge is to maintain price stability and budgetary discipline. In 2011, budget execution was marked by a deficit of 0.8 percent of GDP (as a) result of external shocks and a slowdown in tax collection," the IMF said in a statement.
The Washington-based body said climbing world prices had widened Djibouti's current account deficit to 12.6 percent of Gross Domestic Product in 2011 from 5.8 percent in 2010. International reserves remained high, however.
"The current account deficit is expected to stabilize at around 12 percent of GDP," the IMF said.
Djibouti's port authority said last month it was close to securing $4.4 billion from international banks to finance the building of five new ports in the next four years to meet growing demand for trade boosted by South Sudan's gaining of independence. (Reporting by Abdourahim Arteh; Writing by Richard Lough, Ron Askew)