A confluence of developments is creating a more favorable economic situation for Guinea-Bissau. The country has moved away from debt distress with the debt relief granted after the Highly Indebted Poor Countries completion point last year. Fiscal sustainability has improved considerably through expenditure control and substantial increases in revenue. For the first time, the 2012 budget envisages sufficient fiscal revenue to cover current spending. The immediate challenge is to maintain fiscal prudence, modernize the public administration and defense and security sectors, and create space for private sector development.