reduced the number of employees by 1, 500. these were mostly employees engaged for a temporary period of time. owing to that, today, the number of people working in nbs has declined 28. 9 percent relative to end - 2003. at the same time, the least cost efficient branches have been closed. the wage fund this year has remained unchanged at the level from the year before, whereas any salary increases in 2005 will occur only with respect to a corresponding reduction in the number of employees! the objective of the national bank of serbia is to continue increasing in efficiency and i am sure that we can do this still more and still better in order to create an elite institution, on a par with european and world standards. we try to talk less but to do far more. the next major challenge is certainly the issue of the share of public consumption which is not only extremely high, but continues on the increase, both at the level of the budget of the republic of serbia, and at the level of practically all local governments. it is almost as if someone had started a competition to see who can take more, and then allocate the taken funds, proving thus their “ efficiency ”. however, a game of football should not be played by referees, but by real football players, i. e. the economy, whereas the role of the state is to set the rules of the game and manage the process, in other words, it is the state that ought to be the referee. the rs budget and local government budgets ought not to see a rise this year in real terms, and if additional incomes do occur, these ought to be reflected through lower taxes and contributions, all with the aim of lending support to the economy! as regards the banking system, i would like to point out that it is not only growing in terms of quantity, but is also strengthening in terms of quality. banks ’ balance sheet sum rose by 39 percent last year, banks ’ lending, excluding the public sector, by over 52 percent ( by csd 100 billion ), whereas aggregate citizens ’ deposits increased by 48. 5 percent ( or eur 348 million ). positive growth of all these indicators will continue this year as well ; so, for instance, since 1 january until today, household savings rose by over eur 100 million. with respect to the further restructuring and privatisation of the banking sector, i would like to point out that the nbs is not an owner in that process, but a

still faster spreading of electronic forms of payment. this all the more so since counterfeiters today have no limits, while counterfeit dinar and euro banknotes may enter the country from all over the world. by preserving the stability and the strength of the national currency, serbia ought to prove that it can successfully go through the transition phase, however demanding and difficult it may be, and qualify in that manner for accession to the european union and for the switch to the euro, the single currency in the eu, without taking any shortcuts. serbia is a serious country and should not use another country ’ s currency, especially without prior approval! however, i must point out that the stability of the dinar entails a responsible fiscal policy, a wage policy based on productivity, as well as implementation of structural reforms in practice. if the quality and speed of reforms were measured in words, in particular those said in the past several months and weeks, we would have entered the european union a long time ago! in september last year, when talking about the necessity of implementing structural reforms, i stated that it is high time something were done in this respect, which at first came as a surprise for some people, only to be confirmed later on, but only in words, and not by any concrete steps taken by the government. as the time goes by, all we are left with is the hope that the reason for such state of things is lack of readiness, rather than any lack of understanding regarding what needs to be done. dragging out “ mothballed ” ideas, such as the distribution of free shares to employees in public companies, pushes structural reforms more than 10 years back. the concept of “ patching up ” the economy and standard of living through monetary and foreign exchange policy, while sitting idly and observing the inefficiency, abuse of monopolist status, and, to be entirely honest, significant political influence in a large number of public companies, cannot and should not be allowed and is also fully unsustainable. the time has come for all of us to stop for a moment and remember pre - october 5th programmes and proclamations, and ask ourselves whether anything real is being done today or is this just a way to buy time! i believe that personal example is the best example and that no one can give advice and lectures on reforms to others unless they are implementing these same reforms in their own house – the national bank of serbia. in the past year, we have