The same model was the basis for deciding the massive fiscal adjustment undertaken in 1977 to improve the balance of payments and curb inflation. In both cases the measures were set out in agreements with the International Monetary Fund. For the stabilization programme of 1994-96 we relied on a stringent monetary policy.
The objective was to subdue inflation, and the rate was rapidly reduced from almost double digits to around 2 per cent. Following the drastic monetary restriction, in roughly two years the lira appreciated by more than 25 per cent against the German mark. The growth in the money supply was virtually nil in the two years 1995-96.