##ive hours of discussion with the committee, its working groups and member authorities. above all, banks and other private sector bodies helped us to ensure that supervision would be more closely aligned to sound industry practices. a second group would be those supervisory agencies, central banks, multilateral financial institutions, and other public authorities around the world who shared with us the perspectives and needs of banking systems that are based in many different markets, economies, and legal systems. thanks to discussions with these colleagues, such as through joint working groups like the core principles liaison group and through regional consultations and meetings, the committee was better able to ensure that the new framework would be relevant to many different kinds of banks and economies that are in various stages of growth and development. the cooperation of so many public authorities worldwide has helped to make basel ii a truly global product. the committee will continue to seek opportunities to deepen its relationships, and its opportunities for discussion, with other supervisors and central banks in the months and years ahead. of course, this work would have been impossible without the sponsorship of the bank for international settlements. i would like to offer my sincere thanks to malcolm knight, the general manager of the bis, for his institution ’ s support of our work on basel ii. the bis has been a staunch ally and advocate for our work over the entire thirty - year history of the committee. with regard to basel ii itself, the bis is fostering a greater understanding of the new framework among central bankers and supervisors worldwide through programs organised by its financial stability institute, the “ fsi ”. the committee looks forward to continued collaboration with the bis on matters related to financial stability. basel ii represents a genuine success story in international cooperation. and we know that our need to cooperate and to collaborate does not end when we release this framework. indeed, under basel ii, supervisors and central bankers will need to work even more closely together in the future, especially in view of the evolutionary nature of basel ii. and the committee has a full agenda ahead of it. we must, of course, continue to work on the specifics related to the implementation of the framework and its calibration. we must also ensure that the new framework keeps pace with market developments and advances in risk management practices. as we carry out this work, the committee intends to continue its discussions with the industry and other supervisors in the same open and transparent manner as we have to date. it has been an honour for me to participate in and help to lead this process

prices ( henry hub ) have declined from over of us $ 12 per mmbtu in june to an average of us $ 6 per mmbtu in december 2008. several planned investments in the sector have been postponed because of financing problems or market uncertainties. we have also seen an otherwise struggling stock market take a sharp drop – by 27 per cent – between june and december 2008. our households, like those elsewhere have observed financial turmoil abroad and have become more cautious – much to the disappointment of the merchants who were depending on christmas sales for a large part of their income. there are indications of a marked slowdown in housing activity, in part due to high interest rates but perhaps more so as a consequence of the unwinding of the construction and real estate boom of the last years. in addition, our manufacturing sector has begun to face the impact of the declining external and domestic demand. it ’ s amazing how it takes difficult times like these to appreciate the inter - connectedness of our economy. a fall in demand and energy prices affects not only the large energy companies but a whole host of smaller companies and entrepreneurs who provide services to these companies. the energy sector also accounts for an important part of construction and thus the downturn in the sector exerts a downward pull on construction activity. the manufacturing sector is being affected by a fall in demand from regional markets and the slowdown in tourism and construction. since the non - energy sector is the major generator of incomes, its fortunes have a ripple effect on private demand and on the overall level of investment and employment. and this brings us to the role of government in the present scenario. as you know, over the past few years, the government has taken an active role in promoting economic transformation, including through a significant increase in expenditure on infrastructure and social services. in addition to serving as a catalyst to growth and capacity expansion, government expenditure has also contributed to an unacceptable surge in domestic inflation ( aided no doubt by an unprecedented increase in international food prices ). conscious of the need to reduce inflation the government initially sought to match a projected reduction in energy sector revenues by a compensating cut in expenditures. thus, on november 30, 2008 in response to an expected shortfall in energy sector revenues of tt $ 5. 3 billion, the government announced expenditure cuts of tt $ 5. 0 billion. yesterday the government announced that as a result of the continuing fall in energy prices the revenue shortfall is likely to be some $ 2. 3 billion