degree of economic challenges that we currently face in fiji. for instance, papua new guinea and samoa have better levels of foreign reserves in months of imports than fiji has. yet their lending rates are higher. i wish to take this opportunity to thank the commercial banks for their understanding and support in our effort to address the economic challenges before us. with the credit ceiling in place, the reserve bank has allowed liquidity to rise. liquidity has risen by over $ 50 million since february this year. in addition, we are reducing the statutory reserve deposits by one percentage point from 1st of may which should pump an additional $ 29 million into the system. this should take liquidity to a very comfortable level. we are already seeing the impact of this easier liquidity on wholesale deposit rates which have fallen sharply to 5 percent from around 15 percent late last year. with this liquidity condition, one would expect commercial banks and other lending institutions to pass this lower cost of funds through to lending rates. and here i must congratulate westpac for taking the lead and reducing its lending rates. lower rates will help support growth and investment in this difficult time. in support of investment and growth, the reserve bank now considers commercial banks ’ lending to investment, small and medium size businesses and to exporters to be outside the credit ceiling. since december last year, the reserve bank has approved over $ 70 million of loans above the credit ceiling. economic projection as you know, we project that the economy will fall by 2. 5 percent this year. there are some important factors that will determine the final outcome. first, what happens to tourism is important. there are mixed signals coming from this important industry. the latest visitor arrival figure shows a decline of around 7 percent in january compared to january the previous year. a survey we conducted recently of a few major hotels show a low occupancy rate of around 30 percent and not much higher going into their forward booking. the second factor is gold. the current forecast does not include any gold production. but with the change in ownership of the vatukoula mine, we hear that production may commence in june. the third factor is the possible industrial action by the trade unions. it appears to me that all trade unions are seeking strike mandates. i hope that the situation is amicably settled. the fourth is the uncertainty in the european union ’ s support for the important sugar industry reform. we all hope that the discussion in brussels this week is fruitful for fiji.

roughly unchanged since 2008. given this, the increase in household debt levels is no surprise. rather, this rational response by consumers to easy monetary policy is a sign that the transmission mechanism has been working. i ’ m not trying to diminish the threat posed by elevated household debt. we are continuing to watch this closely. the point is that there is more to the story than the debt - to - income ratio. because house prices have generally been rising faster than incomes, we have seen increases in the size of a first - time mortgage that a new borrower might take out. mathematically, the total debt - to - income ratio rises as a result. but it doesn ’ t necessarily mean an increase in the vulnerability of the economy or the financial system. the second line of defence is sound regulatory oversight of the financial sector. this oversight has been significantly strengthened since the financial crisis. basel iii has made the world a safer place ; there can be no doubt about that. but even before the crisis, canada ’ s banking system was well served by its strong regulatory environment and prudent culture, which allowed our institutions to avoid the worst of the turmoil. given the scale of the damage caused by the financial crisis, it ’ s not surprising that authorities devised a reform agenda of corresponding proportions. the g20 pledged to do everything necessary to address the weaknesses exposed by the crisis. with basel iii, we gave ourselves an ambitious task. we aimed for a financial reform package that would be implemented consistently across jurisdictions and would not impede the ability of financial institutions to innovate, intermediate and foster economic growth. the road to implementation hasn ’ t been as smooth as one would like. but that ’ s hardly surprising, given the political processes and trade - offs required to put the reforms in place and the many differences among the jurisdictions involved. what ’ s important now is that we finish the job. ensuring the safety of the global financial system is in all of our interests. we can ’ t be distracted and lose sight of this objective. for financial institutions, that means meeting both the letter and the spirit of the new capital and liquidity regulations. and policy - makers should expect institutions to respond to the new regulatory regime. we are seeing competitive forces leading to innovation, in market - based finance, for example. to be clear, such innovation is a good thing. even as we implement the new rules, we need to be cognizant of their full impact and ensure that we don