The economy expanded by 5 per cent through the year 2003 and is expected to keep growing at about that pace over the next two years as work on the major aluminium-related investment projects continues. The external account has moved into substantial deficit, but currency appreciation and productivity gains have kept inflation low so far. As increasing capacity pressures are likely to be reflected in higher inflation, official interest rates will need to be raised soon. The appropriate timing and extent of such tightening will depend on how the exchange rate develops and whether the announced fiscal tightening actually materialise . This is uncertain, given the tendency to overspend budgeted amounts...