KEY ISSUES Context. Growth remains strong driven by robust exports, tourism, and construction, despite the recent floods and some slowdown during the 2013 national election. The outlook is favorable with renewed reform momentum after the elections but slow growth in Europe, the U.S. tapering, further extreme weather conditions, and sustained labor market instability continue to pose downside risks, while rapid credit growth and renewed pressure on deposits could undermine financial stability. The authorities have continued to implement past staff recommendations, including mobilizing domestic revenue, taking steps to strengthen monetary policy effectiveness, and implementing some of the 2010 Financial Sector Assessment Program (FSAP) recommendations. Maintaining the momentum of fiscal consolidation. The fiscal position has improved driven by strong revenue performance. Fiscal consolidation should continue to rebuild government deposits?the only fiscal buffers?in view of the expected decline in grants, including by making the planned wage increases in 2014 a part of a broader civil service reform. Implementing the revenue mobilization strategy, better managing contingent liabilities, and continuing to reform public financial management are critical to rebuild and safeguard the fiscal space. Containing macro financial risks and improving monetary policy effectiveness. Inflation is expected to remain low, but rapid credit growth, increasing bank flows from abroad, and the buoyancy of the real estate and construction sectors pose macrofinancial risks. In light of recent deposit withdrawals, strengthening liquidity risk management is a priority. Containing credit growth including by expanding the base of the reserve requirements?the only monetary policy tool?once deposits stabilize, and better monitoring of real estate developments are needed to contain risks. Developing interbank and foreign exchange markets is necessary to enhance effectiveness of monetary policy operations, help reduce dollarization and allow for greater exchange rate flexibility. Further strengthening banking supervision and regulatory framework, and establishing a crisis management framework are also needed to maintain the stability of a rapidly changing financial sector. Promoting economic diversification and inclusive growth. Continued improvement in human capital, including through education and training, infrastructure, and business climate, as well as further reductions in poverty and inequality, are essential for sustainable and inclusive growth.