Policy in the outlook period will be guided by the three-year policy support instrument (PSI) agreed with the IMF in June, as well as the government's five-year strategy paper, Programa Quinquenal do Governo para 2010-14, which is implemented through annual social and economic plans (Planos Económicos e Sociais-PES). The objectives of the latest PSI include unwinding some of the fiscal stimulus policies enacted during the global economic slowdown in 2008-09 and into 2010. The PSI aims to keep the primary deficit stable and to develop a debt-management strategy. The five-year strategy, meanwhile, aims to cut poverty, improve social development and foster key sectors, including agriculture, fishing, minerals, tourism and transport.

Despite troubled relations with donors, the government will remain heavily dependent on aid to implement its policy agenda. Moreover, it intends to take on some private borrowing to fund its ambitious infrastructural development programme, so a clear strategy for debt management is a priority. A programme of reforms to tax policy and collection, public financial management and the supervision of banks will carry on from the previous PSI. However, progress in these structural reforms is expected to be slow, owing to both the scale of the challenges to be overcome and the fact that many officials have vested interests in preserving the inefficient status quo.