Net reserves are more than seven months of imports. Despite continuing improvements in tax collection, the budget deficit for the non-financial public sector increased to 3.3 percent in 1997, and to 4.1 percent in 1998, largely as a result of pension reform. This figure is expected to remain level through 1999. M2 has decreased significantly since 1996 reaching negative levels during the first nine months of 1999. Dollars are a legal means of exchange, and contracts can be written in dollars.
Banks offer dollar accounts and make loans in dollars.
Low rates of inflation at home and abroad have helped to lower interest rates. In October 1999 the average rate paid on dollar deposits was approximately 7.1 percent, and the average rate charged on dollar loans was 18.5 percent. Increased bank competition and new foreign investment in the sector will likely cut financial spreads, making credit still cheaper in the near-term. However, larger financial spreads during 1999 result from a very restricted monetary policy and international financial crises. There are no restrictions on convertibility or remittances.