Togo ran a budget deficit estimated at 2.8% of GDP in 2010, thereby maintaining a modest fiscal stimulus (with the approval of the IMF), including higher spending on capital projects and the repayment of domestic debt arrears in cash. Exceptional financing from donors covered most of the gap. The government will persist with a moderately expansionist budget in 2011 in order to support growth and investment, assisted by fresh donor funding and resources freed by the major debt cancellation in December 2010. However, the government will keep a fairly tight grip on current spending and push ahead with tax reforms (including broadening the tax base and cutting exemptions), which will help to lower the budget deficit by a small margin to a forecast 2.7% of GDP. The government envisages a sharp rise in capital spending (to 9.9% of GDP) in 2011, which is vital for medium-term growth, but it may miss the target because of capacity constraints, including inefficiencies in procurement and project execution. Fiscal prudence will continue when the current IMF programme ends in August 2011 and a successor programme is put in place, but there is a risk of some slippage in fiscal discipline in 2012, when the next legislative election takes place, leading to a small rise in the budget deficit to 3% of GDP. However, the government will be wary of alienating donors: it hopes the contribution of external grants will rise from 2.4% of GDP in 2010 to 3.3% of GDP in 2011 and 4.3% of GDP in 2012.