funds and examine measures to increase the efficiency and effectiveness of government spending, both current and capital. a particular priority within the capital programme should be the maintenance of expenditure on key infrastructural projects, which contribute to the productivity performance of the economy and enhance the potential for the economy to grow in the future. policies that promote productivity and competitiveness can help the economy to weather the effects of adverse developments and of lower growth in the global economy. they also serve to increase the medium - term performance of the economy, protect employment and allow for sustainable increases in living standards. for these reasons, boosting productivity growth and promoting flexibility in response to short - term shocks is particularly important. in addition to enhancing the efficiency of public spending and continuing to address the country ’ s infrastructure deficit, a number of other measures can be identified which would promote this goal. these include greater competition in the more sheltered sectors of the economy, continuing to encourage innovation and r & d activity and enhancing the skill level of the labour force. there is an ongoing challenge to ireland ’ s competitiveness position arising from the combination of exchange rate appreciation and the sharp rise in energy and other commodity prices. ireland ’ s competitiveness position had already weakened in recent years because wage and other cost inflation have been higher in ireland than in our main trading partners. given a lower domestic impetus to growth, a sustained recovery in export performance is essential and will require a concerted effort to improve competitiveness. while recognising that competitiveness in its broadest sense encompasses a wide range of factors, a realistic approach to wage determination by everyone is nevertheless an essential element in improving competitiveness. i would like to re - emphasise the point that i made earlier that we cannot compensate ourselves for commodity price rises over which we have no control. if we attempt to do so, then we risk repeating the mistakes of the past, from which the economy took so long to recover. activities and financial accounts the annual report gives a full and detailed account of the bank ’ s activities in 2007. i will just refer here to our financial accounts. the bank ’ s profits for 2007 amounted to €228 million. surplus income of €193 million will be paid to the exchequer. in addition, a total of €59 million, in respect of the net proceeds of coin issued, was also paid to the exchequer. this concludes my opening remarks. my colleagues and i are now on hand to answer any questions you may have.

driving up headline inflation rates globally, prompting concerns about a possible broadening out of these increases into higher inflation generally. in discharge of its primary duty to control inflation, the ecb governing council last week decided to raise rates by 25 basis points. our approach is to take action now to keep inflation expectations in line with the definition of price stability, preserve purchasing power in the medium term and, thereby, support employment and growth across the euro area. it was also made clear, following the increase in rates, that the governing council has no bias regarding future monetary policy decisions, which will be determined by the incoming data. in addition, we pointed to the need to avoid behaviour that might exacerbate the difficulties of the situation, for instance, by attempts to compensate ourselves for a change in the relative price of imported commodities. financial market developments i would like to turn now to financial market developments. as you know, over the past year, there has been a generalised disruption in normal money market operations between banks resulting mainly from uncertainty regarding the extent of losses on complex financial instruments linked to sub - prime mortgages in the us. central banks responded strongly to counteract these adverse conditions in money markets. the ecb, in particular, was in a position to take effective action in the light of the pre - existing arrangements whereby banks had an extensive range of collateral that could be used to access central bank liquidity. these arrangements effectively addressed the problems at the short - end of the money market. however, with questions of transparency and asset valuation remaining, term interest rates continue to be elevated with higher than normal spreads remaining between longer - term rates and official rates. this will only change when confidence is restored among financial market participants. in the medium term, the assessments by ecofin and by the financial stability forum have provided roadmaps for strengthening the resilience of the international financial system. the irish financial sector is not immune to these global developments. medium - to long - term funding is not as readily available on wholesale markets and this has increased the need for banks to focus on liquidity management. while the share prices of irish banks have fallen, it is important to point out that the direct and indirect exposure of irish banks to us sub - prime mortgages is negligible, and there is no sign of a material increase in loan arrears. accordingly, the banking sector here has not experienced the write - down of assets that has required some of their international peers to raise additional capital,