The interim government has announced plans to draft a supplementary budget to take into account the reduction in the tax take, the increases in public expenditure and the increased costs (estimated at TD2.5bn, or US$1.8bn) of the emergency plan. The rise in spending will put more pressure on the domestic and external financial balances and foreign-exchange reserves, which could be depleted rapidly in the coming months if economic activity does not quickly return to normal levels. Fiscal policy will remain expansionary for the remainder of the forecast period to support development expenditure in the interior regions. In 2011 revenue will be hit by the disruption in business activities. Corporation tax will be the main source of income, as revenue from privatisations will dry up, but even this will be reduced owing to the disruption in business activity. In addition, rising commodity prices this year will only make it harder for the government to implement spending cuts. However, from 2012 onwards the government will attempt to expand the tax base-by reducing exemptions and improving tax collection. We forecast that government revenue will decline in 2011, but from 2012 onwards it will rise rapidly, in line with stronger domestic demand and measures to widen and deepen tax collection. We estimate that the budget deficit reached 4.3% of GDP in 2010 and forecast that it will widen in 2011 to 9.2% of GDP. The deficit is expected to average 4.1% of GDP in 2012-15.