financial problems and the credit crunch in their countries of origin. availability of credit perhaps the most challenging effect of the global financial crisis, especially for developing countries like zambia, was its impact on private sector investment. between 2006 and 2008 credit to the private sector grew strongly ( at an average of 45. 6 % per annum ), largely driven by the expansion of consumer credit and the strong growth in the domestic economy. an immediate consequence of the financial and economic crisis was limitation of credit lines and a slow - down in fdi flows. in 2009, domestic credit is expected to slow down as financial institutions adopt more conservative lending practices and tighten their lending standards. in addition, the deterioration in corporate and household balance sheets has now been translated into higher non - performing loans ( npls ) as a percentage of total assets in the banking sector ( from 6 % in mid - 2008 to 13. 1 % in september 2009 ). the deterioration in npls entails more vigilance for the bank supervision function of the bank of zambia. iv. strategies to maintain stability in responding to the crisis, the government has taken steps to maintain macroeconomic stability and continue encouraging investments that will lead to diversification of the economy and safeguard vital social services. further, the government found new investors to take over the running of the closed mining operations and negotiated with the owners of the bigger mines on modalities of continuing with operations at the mines to forestall further job losses. the 2009 budget prioritised infrastructure development with the view to opening investment opportunities for diversification, particularly in agriculture, tourism, and manufacturing sectors. some specific measures include the following : ( i ) agricultural sector : – increased allocation of funds to the sector for livestock development and creation of at least one disease - free livestock zone, farm block infrastructural development and irrigation projects. further, the value added tax on selected agricultural equipment and spares, was zero rated as incentive to increase agricultural production and productivity. ( ii ) tourism sector : – in order to diversify the economy and attain broad based economic growth, government increased the allocation to the sector to improve access to the northern tourism circuit ( infrastructural development in mbala and kasaba bay ). further, government will embark on the development of a new world class tourism area in livingstone, and step - up the development of road infrastructure in key national parks namely, luangwa and kafue. ( iii ) manufacturing : – in order to expand the

, and we should build on it. we should also celebrate the institutional success of the eurosystem. the ecb has fulfilled the goal entrusted to it by the treaty, of keeping inflation expectations anchored, even at very difficult times. and the eurosystem is in itself a truly fascinating experiment. those of us privileged to meet every fortnight in frankfurt bear constant witness to the success of this undertaking, which is unique in the process of european construction. the eurosystem blends centralised and decentralised decision - making, reflecting perfectly the common european project. on one hand the ecb takes centralised decisions for three hundred and thirty million citizens who have the euro as their common currency, while on the other, the eurosystem operates in a highly decentralised and co - operative manner. the national central banks are involved in many joint projects. but allow me to discuss one with which i have been closely concerned in recent years : the launch and design of target 2 securities which, behind this singular acronym, is an ambitious project that will facilitate securities settlement throughout europe. this platform is being designed and constructed by four central banks : germany, france, italy and spain. any pro - european would be most satisfied to see officials of the banks from these countries working together every day on a common project. critics of the euro, who are quite frankly a minority today, try to argue that the divergences observed across the monetary union members in terms of inflation and growth during its first ten years have been a problem. but the figures are not on their side. over the past decade, inflation and growth diversity among the emu members has been very moderate compared with what had previously occurred. and compared with other regions, this diversity, though somewhat more persistent, has been on the same scale as the heterogeneity across the different us regions and states, being the united states an example of a monetary union of approximately the same size as the euro zone, and whose viability is unquestioned. nobody considers that these divergences would advise california to have a different currency from that of new york or illinois. what's more, empirical evidence from emu shows that national business cycles have, with economic and monetary integration, become more synchronised. admittedly, though, growth and inflation differentials that we should reduce have persisted over this period. however, the solution to this problem should not be sought by questioning what the euro can do to reduce these differences.