the end of the year. in january it was somewhere around 50 % of gdp. the fiscal policy, in full coordination with the monetary policy, is providing an impetus to economic growth, without giving rise to inflationary pressures – the government ’ s rising capital expenditures contribute to the rise in investment, while higher pensions and wages in the public sector are conducive to sustainable growth in consumption. in accordance with our projections, the current account deficit in 2018 maintained its share in gdp at the level from 2017 ( 5. 2 % ), although imports increased on the back of higher investment and унутрашња употреба global oil price hike, and external demand slowed down. at the same time, for the fourth year in a row, the high net inflow of fdi, equalling eur 3. 2 bn, was more than sufficient to cover the current account deficit ( 143. 4 % coverage ). the path to achieving the above results was paved by the adopted economic policy measures that were appropriate and timely. their integral part is the monetary policy which maintained the price and financial stability and thereby contributed significantly to a considerable acceleration of economic growth and improved outlook for the coming period. it is particularly important to note that stability was ensured amid growing uncertainty in the international environment, which attests to the efficiency of monetary policy and measures undertaken by the national bank of serbia. another important result of these measures is the share of non - performing loans in total loans that was reduced to 5. 7 % at end - 2018, its new lowest level, thus confirming the further strengthening of banking sector stability. ladies and gentlemen, dear colleagues, since we last met at the presentation of the november inflation report, the nbs executive board has kept the key policy rate at 3. 0 %, its lowest level in the inflation targeting regime yet. in making such decision, the executive board has been guided by the assessment that inflation would continue to move within the target band over the projection horizon, thanks to, among other things, the effects of past monetary policy easing. caution is warranted by uncertainties in the international environment, notably movements in primary commodity prices, pace of monetary policy normalisation by leading central banks, and possible further rise in protectionism in international trade. having in mind that the key risks in the conduct of monetary policy stem from the international environment, the nbs will continue to carefully monitor and analyse trends in the international financial and

inflation may ease gradually in the second half of 2022 - 23, precluding the chances of a hard landing in india. approach to monetary policy in crisis times 20. a closer look at our journey through the two black swan events of covid - 19 and the geopolitical crisis in europe would bring out certain distinct contours of our approach in these turbulent times. our overarching objective was to safeguard the economy and preserve financial stability. our endeavour has been to ensure a soft landing. these objectives continue to guide our actions even today and it will continue to be so in future. i would now like to touch upon a few aspects of our approach. communication in turbulent times 21. for monetary policy to be effective in such turbulent and uncertain times, communication of monetary policy objectives, actions and stance with prescience and clarity assumes even greater importance. monetary policy is ultimately about managing expectations of various economic agents – from households to financial markets. in this context, over the past three years, we backed our actions with clear forward guidance and tweaked it as necessary with reference to the evolving circumstances. for instance, our forward guidance was initially state - based. but, in the second half of 2020 - 21, there were undue market concerns that the accommodative monetary policy stance might have to be reversed in the face of elevated inflation. to quell such disruptive forces and their possible negative effects on our accommodative stance, we supplemented our state - based guidance with time - contingent guidance by stating our intent to continue “ with the accommodative stance of monetary policy as long as necessary – at least during the current financial year and into the next year... ”. inflation eased in the second half of 2020 - 21 itself in line with our assessment as supply side pressures abated. the time - based element of the guidance did help to anchor market expectations and moderate undue expectations building up at that time of a possible reversal of the monetary policy stance. 22. we have actively engaged in two - way communications – we consult actively with various stakeholders in the run up to the bi - monthly mpc meetings ; we hold wide ranging press conferences after the bi - monthly meetings to put forward our viewpoints clearly and clarify the issues raised by the media and analysts. we back up this with speeches and media interviews. the release of the minutes after 14 days of the mpc meeting and individual statements of the members, including my statement,