shocks without financial collapse
is a tribute to the resiliency of the Brazilian economy and the
economic program put in place by former President CARDOSO and
strengthened by President LULA DA SILVA. Since 2004, Brazil has
enjoyed more robust growth that yielded increases in employment and
real wages. The three pillars of the economic program are a floating
exchange rate, an inflation-targeting regime, and tight fiscal
policy, all reinforced by a series of IMF programs. The currency
depreciated sharply in 2001 and 2002, which contributed to a
dramatic current account adjustment; from 2003 to 2006, Brazil ran
record trade surpluses and recorded its first current account
surpluses since 1992. Productivity gains - particularly in
agriculture - also contributed to the surge in exports. While
economic management has been good, there remain important economic
vulnerabilities. The most significant are debt-related: the
government's largely domestic debt increased steadily from 1994 to
2003 - straining government finances - before falling as a
percentage of GDP in 2005. Brazil has improved its debt profile over
the past year by shifting its debt burden toward real denominated
and domestically held instruments. LULA DA SILVA restated his
commitment to fiscal austerity by maintaining the country's primary
surplus during the 2006 election and plans to pass a package of
further economic reforms upon entering office for his second term.
Another challenge is maintaining economic growth over a period of
time to generate employment and make the government debt burden more
manageable.

British Indian Ocean Territory
All economic activity is concentrated
on the largest island of Diego Garcia, where joint UK-US defense
facilities are located. Construction projects and various services
needed to support the military installations are done by military
and contract employees from the UK, Mauritius, the Philippines, and
the US. There are no industrial or agricultural activities on the
islands. When the Ilois return, they plan to reestablish sugarcane
production and fishing. The country makes money by selling fishing
licenses and postage stamps.

British Virgin Islands
The economy, one of the most stable and
prosperous in the Caribbean, is highly dependent on tourism,
generating an estimated 45% of the national income. An estimated
350,000 tourists, mainly from t