Output growth was weak in the first half of the year but is expected to gain momentum gradually this year and through 2005 in line with the broadening of the recovery in Europe. The unemployment rate will fall slightly and inflation will continue to be low. Tax reductions scheduled for 2005, which will be mostly debt-financed, will mean a delay in reaching the objective of a balanced budget and are likely to have a procyclical impact. Priority should be given to cuts in government expenditure to create room for the planned tax reductions, while also reducing impediments to increased labour market participation...