expenditure over the next three years ( with r32 billion of this amount being spent on rail and port infrastructure ). as could be expected, the lengthy upswing in economic activity and expenditure has been accompanied by a strong increase in import volumes. import volumes primarily reflect the strong growth in consumption and investment expenditure and are consequently expected to track the pace of growth in domestic demand closely. accordingly, the current account of the balance of payments moved into deficit from 2003 and the deficit amounted to approximately 4½ per cent of gross domestic product in 2005. however, relatively favourable prices for most of south africa ’ s export commodities have been helping to contain the trade and current - account deficits. at the same time, significant inflows of financial capital have been recorded over the past three years, exceeding the currentaccount deficits and enabling the south african reserve bank to increase the gold and other foreign exchange reserves. export volumes are also expected to continue benefiting from the projected global growth, the african growth and opportunity act, and government ’ s motor industry development programme. 3. international economic developments the international economic environment has also supported domestic economic developments. although there was a slight slowdown in the latter part of 2005, global economic activity managed to maintain a solid pace of growth throughout the year. this lent further support to the rising trend in the international commodity prices which accelerated strongly in the fourth quarter of 2005 and first quarter of 2006. more recently commodity prices have retraced somewhat, but this may prove to be a temporary correction given consensus forecasts for global demand. ministers from oecd countries last week expressed optimism about prospects for the world economy, with continued strong growth and moderate inflation, but warned that further rises in energy prices could pose a significant risk. oecd ministers expect the buoyant pace of world growth witnessed in the past few years to be sustained in the near future. their comments echoed the oecd's twiceyearly economic outlook released last week, which painted a broadly positive picture of growth prospects while sounding a warning over future energy price rises and current - account imbalances. oecd ministers observed that inflation was likely to remain under control, despite shrinking spare capacity and higher commodity prices, this being so because heightened international competition would help contain prices. a wall street journal report which was also published last week nevertheless sounded a warning and suggested that if the story of today's international economy were handed down as a fable, recent developments might result in it being called "

rates, in % ) ( y - o - y rates, in % ) current inflation financial sector * corporate sector * financial sector - bloomberg - 2 12 3 12 3 source : nbs. 12 3 12 3 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 sources : gallup, ipsos / ninamedia, bloomberg and nbs. * ipsos and gallup until december 2014, ninamedia since december 2014, and ipsos since january 2018. our decision to keep the key policy rate unchanged at 6. 5 % in the period since the previous report was underpinned by the projected inflation movements and the transmission of the effects of past monetary tightening to interest rates in the money, lending and savings markets, as well as to inflation expectations. from this time distance, taking into account movements in key macroeconomic indicators, we may freely say that it is thanks to our monetary policy, which we tightened at a continuous, but moderate and measured pace, that a concurrent reduction of inflationary pressures and inflation ’ s return within the target band over the monetary policy horizon were achieved. the negative effects on economic growth were minimised and the financial stability fully preserved. this is confirmed by the fact that the share of npls in total loans has remained at its historical low of around 3 %, underpinned by a robust regulatory framework and a carefully designed mix of monetary and macroprudential policy measures. a good example of such policy is our september decision to cap the interest rate on variable - rate housing loans at 4. 08 % for first - time home buyers. this decision has had no major impact on the banks ’ financial result and does not fuel inflationary pressures, but it has helped alleviate the credit risk and preserve financial stability, and, to an extent, supported the recovery of personal consumption. 3 of 9 chart 5 movement in the key policy rate and average repo rate chart 6 npl level and share in total loans, gross principle ( in rsd bn ) ( in % ) ( daily data, p. a., in % ) household sector corporate sector other sectors npl share in total loans ( rhs ) key policy rate lending facilities rate deposit facilities rate average repo rate 1 / 2020 7 / 2020 1 / 2021 7 / 2021 1 / 2022 7 / 2022 1 / 2023 7 / 2023 1 / 2024 source : nbs. source : nbs. that we have managed to achieve the so -