During the first three years of this century, fiscal profiles of the MENA region continued to deteriorate with the overall fiscal balance converting to an average deficit of 1.7 percent of GDP in 2002. There is an overall swelling in expenditures coupled with a general drop in revenues. Fiscal policies in oil exporting countries are often determined by cyclical developments in oil prices. The decline in oil prices over 2000-2001wosened the fiscal profile of oil-producing nations. In other countries of the MENA region, were exerted to control fiscal positions. While both oil producers and non-oil producers still need to modernize their revenue structure, non-oil producing nations have a more advanced taxation system. However, for most MENA countries, a main challenges is the fast demographic evolution, high population growth and a rise in the labor force, pressuring fiscal positions through mounting personnel costs outlays. Interest payments also take up an important share of spending in some countries that have an important debt burden. Personnel cost and interest payments usually constitute the most rigid components of government spending and are difficult to scale down. Countries facing fiscal pressure usually start by curtailing capital expenditures, thereby negatively affecting economic growth. Some countries chiefly rely on their domestic markets to finance their fiscal deficits. By issuing issue treasury bills, or directly borrowing from public institutions, they thereby render the roll-over risk lower than through market access. For countries that borrow in foreign currency, the nature of their borrowings also differs amongst each other in that some are frequent issuers on international capital markets, while others mostly rely on bilateral and multilateral official funding.