There are risks of fiscal slippage outside the state budget. While some of the difficulties that plagued ZUS in 1999 will not recur, the loss of payment discipline by taxpayers is likely to carry over into 2000, even with the enhanced efforts to combat it. In addition, the compression of local government investment spending that followed fiscal devolution seems unlikely to be fully sustained, and overruns in the health sector could prove extremely difficult to contain. In the event of significant slippages, the general government deficit target should be defended by mid-year fiscal adjustments, particularly if the current account balance does not strengthen. The commitment to transparency in fiscal data is commendable.
Several actions are necessary, however, to give full expression to that commitment.
In particular, official commentary on the fiscal stance should be refocused away from the state budget to the balance of general government, and the process of collection and dissemination of data on the local governments should be accelerated. The IMF fiscal transparency assessment requested by the Ministry of Finance would provide an appropriate context in which to consider further steps. Inflation targeting 9. The large external current account deficit qualifies the extent to which monetary policy can focus solely on inflation. The vulnerabilities associated with high deficits imply that monetary policymakers should not ignore the consequences of their actions for the external balance.