The presidential election on July 5th is likely to be a close contest and will
probably require a second round of voting in September. The three main contenders are from secular-nationalist parties, thus the Economist Intelligence Unit does not forecast a significant change in policy direction or in the political structure. It does seem likely, however, given the lack of a dominant party in the legislature, that political effectiveness will prove problematic in the new administration. The onerous debt-servicing burden suggests that fiscal policy will have to remain tight, although we expect a greater focus on reducing unemployment and poverty in 2005. Real GDP growth is expected to strengthen in 2004 owing to robust private consumption, but will moderate again in 2005 as the stimulus from election-related spending disappears.

Annual inflation is forecast to average 5.6% in 2004-05, and a current-account surplus will be maintained, although it will fall as a share of GDP.