they do not fully understand, for which at a later time they would have to pay a “ tax on naivete. ” that is why we introduced the effective interest rate, so that citizens should know how much each borrowing costs and so that they should be able to estimate whether they are able to meet the obligations they have assumed. the fact that our people have accumulated high credit appetite over the past decade or so, and that, when they borrow, they do not respond adequately to the level of interest rates, does not relieve banks from the responsibility to be real partners and financial advisors to their clients – from being responsible not only for what they do, but also for what they tell their clients. the nbs and i, as its governor, are being reproached for warning citizens of the risks of foreign currency clause indexation or borrowing in swiss francs because serbia will one day enter the eu, but certainly not a monetary union with switzerland. we are also being reproached for advocating full transparency in banks ’ operations, and for requiring observance of the ethical code which would obligate bankers to fair competition. the nbs will intensify its efforts on educating citizens as users of financial and banking services, and i hope that in this it will be joined by an increasing number of banks. the immediate task that the nbs has set itself is to restore public trust in the dinar not only as a transaction currency, but also as a savings instrument. although dinar savings have grown significantly over the past two years despite high inflation, their present level of around csd 4. 7 billion is still not satisfactory, even though all calculations show that dinar savings are much more profitable than foreign currency ones. this is due primarily to negative past experiences citizens have had with dinar savings, which, as opposed to foreign currency savings, completely lost their value in the years of hyper - inflation. however, with low inflation rate and higher exchange rate fluctuations, citizens will be increasingly interested in saving in dinars, especially when they realize that this is not a short - term trend, as it most certainly is not (! ), while the increase in interest rates in the euro area will provide banks with an additional motive for a more active approach to collecting and increasing dinar savings. the nbs has offered citizens its savings bills, whereas banks are expected to diversify their offer of dinar products, both deposit and credit ones. at this point, when external borrowing is the

dinar loans to corporates were cut by 11. 6 pp, while interest rates on newly approved dinar loans to households were trimmed by 10. 7 pp. total loans to corporates and households rose by 1. 9 % y - o - y in december 2016, led by the rise in household lending ( 10. 1 % y - o - y ). excluding the effect of corporate loans write - off and early loan repayment by a public enterprise to domestic banks in october, covered by a cross - border loan, the y - o - y rise in corporate lending equalled around 1. 5 % in december. ( slide 9 ) in 2016, internal imbalance continued to narrow, as shown by the general government deficit of 1. 4 % of gdp ( vs. 3. 7 % in 2015 and 6. 6 % in 2014 ), mostly on account of improved collection of all categories of tax revenue. favourable fiscal movements persisted in january, according to preliminary data at republic level. as regards the projection of fiscal movements, in 2017 consolidated deficit is expected to be at a level similar to that in 2016, despite the wage and pension increase and higher capital expenditures, mainly due to the continued rise in tax revenues. in late 2016 public debt was lower than in late 2015 ( a year prior relative to the initial projection ). it will stay on a downward path in 2017, and i believe in the coming years as well. we all tend to be impressed with the achievements of physics and information technologies and often disregard the importance of economic theory and its most direct and unfaltering impact on our everyday lives. a bad reform or wrong economic moves can have devastating consequences. they can pauperise and make jobless people across the social strata. wrong theories suggest wrong reforms, but the responsibility has never been with theoreticians and advisers. the responsibility lies with decision - makers. we shall therefore listen to what everyone has to say at this event, but we shall work in a way that will help us come here before you next year with the best possible results. and i am referring to fiscal consolidation and structural reforms. ( slide 10 ) dear colleagues, while improving our macro - and investment environment, we have preserved the necessary stability of the financial sector. though the objectives in this area are hard to measure, the results achieved by the nbs are indisputable. it is enough to look behind and remember 2012 and the challenges we faced at the time. the presence of