jorgovanka tabakovic : overview of recent monetary and macroeconomic trends in serbia introductory speech by dr jorgovanka tabakovic, governor of the national bank of serbia, at the presentation of the inflation report - august 2016, belgrade, 17 august 2016. * * * ladies and gentlemen, dear colleagues, welcome to the presentation of the august inflation report. as always, we will give you an overview of monetary and macroeconomic trends for the period since the previous report and set out our expectations for 2016 and 2017. however, before we move on to this, i would like to share with you a few thoughts about a much longer period, because recently it was four years since my appointment as the governor of the national bank of serbia. together with us you were witnesses to the numerous challenges we faced, particularly from the international environment. despite the challenges, the national bank of serbia has achieved admirable results – inflation is low and stable today as it has been for three years straight, which was not the case earlier. our good results are not only due to global circumstances and low inflation abroad, because inflation in the international environment was around 2 % rather long, while at the same time it was much higher and more volatile in serbia. it was the reduction in serbia ’ s internal and external imbalances and the maintaining of relative stability of the exchange rate that were instrumental to bringing inflation in serbia to a level comparable to that of other countries. at the same time, deflation was averted. expectations of market participants that inflation will remain low for the next two years represent another indicator of confidence in the national bank of serbia and the measures it implements. chart 2 one - year ahead inflation expectations * and target chart 1 consumer prices and target tolerance band ( y - o - y rates, in % ) tolerance band ( y - o - y rates, in % ) 5. 5 4. 0 2. 5 1. 2 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 sources : sors and nbs calculation. corporate sector financial sector ( ninamedia ) financial sector ( bloomberg ) target tolerance band targeted inflation consumer prices ( cpi ) targeted inflation target tolerance band 2, 8 2, 0 2, 0 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 sources :

flat and enable enterprises to purchase new equipment. everybody does well if the saving and credit scheme runs smoothly. 2. economic growth by 3. 5 % in 2009 is very challenging indeed! lower economic growth implies lower income, and in case of no decline in spending, a higher than currently planned growth of 1¾ % in consolidated budget deficit will automatically follow! hence, it is of utmost importance that we design a set of measures to be implemented in case economic growth turns out to be lower than planned for the period ahead. 3. proving that serbia is different than other countries in the region. serbia was the first country in the region to seek financial arrangement with the imf as a precautionary measure. this proves that we are a responsible state and wish to implement transparent economic policy under the imf umbrella. this is certainly a point in our favour and will prove useful in serbia ’ s attempts to remain an attractive foreign investment destination in the near future of extremely cautious capital spending and restrictions on investments. thank you for your attention!