targets have been revised. the government now projects gdp to grow by 5. 7 - 6. 6 percent while the forecast for inflation is at 9 - 11 percent. the bop surplus will reach us $ 2. 5 billion. exports are seen to grow by 5 percent while imports will expand by 10 percent due to higher prices of oil and food imports. what can you expect in terms of the bsp ’ s policy thrusts? the policy thrust of the bsp is aimed at ensuring that the headway that we have achieved in nurturing a resilient economy and a strong banking sector will continue. the bsp ’ s key monetary policy thrust will remain focused on promoting price stability. in its latest policy move, the bsp recognized the need for a more decisive monetary action to reduce the risks to inflation expectations and the long - term cost to output growth from prolonged high inflation. so our eye is on inflation because price stability is critical to sustained, durable economic growth. in the external sector, our policies will continue to be directed at maintaining a marketdetermined exchange rate with scope for occasional official action to address sharp volatilities in the exchange rate ; maintaining a comfortable level of reserves as selfinsurance ; and ensuring the sustainability of our external debt. in the financial sector, we remain firmly committed to institute key reforms that will lead to greater efficiency, effective risk management, stronger capital base and improved corporate governance standards in the banking system. given these reforms, we expect to see the continued expansion of bank resources and capital, as well as a further improvement in bank asset quality. we also envision a stronger and more resilient banking system as banks improve their ability to anticipate, price and manage risks. we will also continue to push for the passage of key legislations intended to develop a deep and efficient capital market as a complementary source of funds. this will make credit more accessible to a broader set of users and ensure a more efficient mobilization of resources. in summary, the bsp is prepared to take all necessary actions to address the threat of high inflation and promote price stability. we also continue to be mindful of the impact of any policy action on the economy ’ s growth momentum. the resiliency of our economy allows us to have greater flexibility in responding to the challenges that come our way. i am now ready to discuss the issues of particular interest to you. thank you.

. what then are the implications for inflation? because there is still a fairly wide margin of spare production capacity in the economy, there is room for strong growth in coming quarters, without too much concern about a flare - up in inflation. but as slack in the economy is taken up, we won ’ t need as much monetary stimulus as we have now to keep the economy on a sustainable, low - inflation growth path. put another way, it is only by maintaining canada ’ s low rate of inflation that monetary policy will help to consolidate a durable economic expansion. and this is the type of expansion that delivers improved economic conditions and benefits for canadians. what is my message to you today? canada has been through a difficult period of major economic changes, some of which are still unfolding. but we have also made remarkable progress in restoring the credibility of our economic policies and laying the foundation for a more efficient, prosperous economy in the future. we are now in better shape than we have been in years to face the economic challenges of the future.