Fiscal Slippage A Concern

After marking another year in which the budget position worsened, the government is targeting a balanced primary budget for the coming fiscal year (2012/2013). The government's key medium-term challenge is to consolidate the fiscal accounts without negatively affecting the economic recovery. With our outlook for growth to remain weak and subject to considerable downside risks, we expect the government will face difficulties in meeting its near-term fiscal targets.

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