Strong fiscal discipline, including strict spending controls imposed as part of an IMF adjustment programme, produced a primary budget surplus (excluding interest payments) of 9.4% of GDP in 2010-and an overall surplus of 2.8% of GDP-comfortably ahead of the EFF targets. Seychelles will continue to post a budget surplus in 2011-12-albeit a smaller one-enabling additional debt repayment and further spending on much-need infrastructure improvements. Better expenditure management and the ongoing reform of parastatal enterprises will reduce the drain on the public purse. Revenue will benefit from sweeping tax reforms intended to make the system clearer and fairer, including the establishment of a unified revenue commission, cuts in business taxes and the introduction of personal income tax in 2010 (to replace social security contributions)-which was cut from 18.75% to 15% last October. A value-added tax (VAT) will follow in mid-2012, to replace the goods and services tax. The adjustments may restrain the overall tax take in the near term, but will encourage economic activity and help to place public finances on a sustainable footing in the medium term. The budget surplus will narrow to about 2.5% of GDP in 2011, even accounting for potential election-related spending, before shrinking further to 1.9% of GDP in 2012.