KEY ISSUES Context. Economic growth and macroeconomic stability improved in 2013. A robust rise in tourism earnings supported growth, as well as a reduction in the current account deficit as a share of GDP. The exchange rate has strengthened slightly, at the same time as the central bank accumulated more international reserves than expected. Inflation has decelerated and the government is on track to achieve its 5 percent of GDP primary surplus target. Focus. Discussions centered on the 2013 fiscal performance, the 2014 budget framework, monetary policy challenges (particularly responses to excess liquidity), and reforms in public enterprises, utility tariffs, and public financial management to reduce fiscal risks, strengthen the business environment, and improve the quality of public service provision. Program performance. All performance criteria for end-June 2013, the program’s last test date, were met. All the third quarter indicative targets were also met. The measures in the structural benchmarks were all completed, although there were short delays compared to initial plans for technical reasons. Staff recommends completion of the eighth review under the Extended Arrangement. Policies in the period ahead. The authorities remain resolute in their objective of reducing public debt below 50 percent of GDP by 2018, which leaves little scope to relax fiscal policy. Policies in 2014 aim to continue debt reduction while responding to some social pressures. Monetary policy will continue to stabilize inflation at low levels and aim for international reserves accumulation. Structural reforms aim to extend improvements in financial discipline to the broader public sector, including through utility price adjustments that reduce implicit subsidies and through better oversight of parastatals. The authorities indicated their intention to request a successor arrangement with the IMF to consolidate and extend the progress made during this EFF. Risks. The largest risks to the economic outlook and program performance are external, including most notably a downturn in Europe or global financial turbulence, which could lead declines in tourism receipts, drops in FDI and/or bank retrenchment. Homegrown risks to the program center on additional losses of key public enterprises that could jeopardize the government’s debt reduction objectives.