We have revised down our forecasts for the budget deficit, as the Ministry of Finance has announced a lower deficit in 2009 than had been estimated previously. It also announced estimated and planned expenditure and revenue for 2010-12, with deficits expected to average around 6% of GDP each year. However, government expectations for revenue and oil prices tend to be conservative, and the government also usually fails to disburse its spending allocations fully. We therefore estimate that the budget deficit reached 3.7% of GDP in 2010. In 2011 we expect that the deficit will contract to 1.3% of GDP, even further below government projections, as it has not fully accounted for proceeds from a value-added tax (VAT) and windfall revenue from converting existing mobile-phone contracts into licences and awarding a licence to a third operator. In 2012 continued strong growth in capital expenditure-in keeping with the government's five-year plan to boost investment-without exceptional increases in revenue will lead to a small widening the deficit to 3.9% of GDP. Plans to reform public enterprises-most of which are unprofitable-by transforming them into autonomous companies with their own budgets should have a net positive impact on the public finances, and some privatisations are possible, particularly if the Damascus Securities Exchange displays more vibrancy.