In 1994 and 1995, central bankers saw it as their duty to battle the rapid expansion of credit that came with currency stability. This re-education process now basically is complete. We are reducing reserve requirements slowly, in order not to boom the economy or lose control of inflation. High real interest rates also have been a favored Bank tool for crushing loan growth and this policy also is changing. We believe it could go lower, since inflation likely will match or undershoot government targets.
Fiscal deficit is now sustainable, reducing refinancing risk.
Sustained economic growth will generate additional revenues, while new rules capping payroll spending and social security payouts will take effect in 2001. And even this figure is more a recommendation than requirement. The lower floor may give added flexibility to intervene in the foreign exchange market in a future confidence crisis. Lending rates are falling and loan growth is surging. Both trends should continue.