Most of the tax cuts for individuals and tax concessions for firms that were implemented in late 2008 and 2009, and also the range of incentives to help boost economic activity that were introduced during that time, remain in place. Moreover, public expenditure remained relatively high in 2010 as a number of major projects reached implementation stage. Nevertheless, a strong cyclical recovery in 2010 helped to boost revenues and reduced the need for non-capital fiscal stimulus measures (such as subsidies given to employers in an effort to encourage them to retain staff). As a result of this recovery, the budget moved from a deficit of 1.7% of GDP in 2009 to an estimated surplus of 1.2% in 2010. We expect the government to pursue a generally prudent fiscal policy direction in 2011-15, as it remains mindful of the looming pressures on the public purse arising from the rapid ageing of the population, as well as of the uncertain costs involved if the country has to absorb North Korea in the future. The budget will remain in surplus throughout the forecast period as revenue expands at a healthy pace and expenditure growth is contained. The public debt stock will remain low by OECD standards. We forecast that the public debt to GDP ratio will fall from 23.1% of GDP in 2011 to 21.9% in 2015.