The broad-based expansion is expected to continue, with GDP growth around 4% in both 2006 and 2007 and employment in the formal sector expanding. Inflation is set to be on target and the current account deficit should remain close to 1% of GDP. In the context of uncertainty related to the 2006 elections, the government’s prudent macroeconomic policy has reduced the economy’s vulnerability to shocks. Faster growth of living standards requires a tax reform to finance development needs on a stable and predictable basis, while reducing distortions. Measures are also needed to improve the education system and the functioning of the labour market and to increase competition.