Strong improvement of fiscal prospects continued into the second quarter, driven mainly by sustainable increase in tax revenues. We estimate that budget deficit will be even lower this year, and that it will equal 2.5% of GDP.
According to our estimates another 400 million in expenditure cuts backed by structural reforms that make them permanent are needed to bring the recently high budget deficit towards a more comfortable level in 2011. The resulting budget deficit of 6% is not a magic number, though!