Activity is broadening and growth close to 5 per cent over the projection horizon is exceeding previous expectations. Headline inflation will drop significantly from currently high levels once the effects of administered price adjustments, tax reform and European Union accession-related food price increases start to fade in 2005. Unemployment will also begin to fall to a rate of 16 per cent by the end of 2006. For fiscal policy to remain credibly committed to the adoption of the euro in 2009, the substantial government spending cuts already budgeted should be implemented as planned. The monetary authorities should specify and communicate their strategy for euro-area entry as soon as one-off effects on inflation dissipate. ...