Despite the current problems related to the global financial and economic crisis, ongoing macroeconomic adjustment continues to bear fruit. Attainment of the primary budget surplus targets has delivered falling public debt-to-GDP ratios since 2003. Prudent debt management has reduced refinancing risk and external vulnerabilities. The forward-looking conduct of monetary policy within a framework combining inflation targeting with a floating exchange rate has yielded reasonably low and progressively less volatile inflation, as well as anchoring inflation expectations around the pre-announced targets. Credit, which had traditionally been in short supply, began to expand in earnest in 2003 on the back of favourable market conditions, monetary easing and financial innovation to improve access to bank loans among the underserved population. While there may be room for some further monetary easing during 2009-10, depending on the pace and strength of the recovery, additional counter-cyclical discretionary fiscal action in response to the global crisis would be inadvisable, unless activity weakens much further, because it would put additional strain on financial markets at a time when credit is scarce for private-sector activity. A long-standing challenge remains in the fiscal area: expenditure growth will need to be contained to make room in the budget for raising pro-growth public investment and reducing the tax take over the longer term. Further financial deepening should also feature prominently in the authorities’ structural reform agenda. In this respect, a gradual elimination of compulsory bank reserve holdings, which began to be eased as part of a liquidity-enhancing package in response to the global crisis, as well as of directed credit operations, would also be advisable.