interpreted as a signal of an earlier - than - expected reversal of quantitative easing. the main export sectors of the south african economy therefore face a challenging outlook, from both external and internal sources. commodity prices, apart from the gold price, have not generally recovered to pre - crisis levels. at the same time input costs, particularly electricity and wage costs, have risen significantly, contributing to the contraction in the sector in 2012. furthermore the sector is beset by an increasingly difficult labour relations environment, which resulted in protracted industrial action in the final months of 2012. the manufacturing sector remains vulnerable to the continued weak demand from europe while its import and export competitiveness was also adversely affected by the appreciation of the currency in 2010 / 11. following the recent depreciation of the rand the outlook for the sector is more positive, but nevertheless fragile. where do south africa ’ s short term growth prospects lie? investment by the private sector, which accounts for around two - thirds of gross fixed capital formation, remains constrained by relatively low levels of capacity utilisation in the manufacturing sector. electricity supply constraints are also an impediment to investment growth, and are likely to remain so until new capacity, currently under construction, comes on stream during 2014. the main impetus to growth is likely to come from infrastructure - related investment expenditure by the state - owned enterprises, which have a particular focus on power generation, road and rail transport, as well as port efficiencies and capacity. the national treasury estimates that r827 billion will be spent on infrastructure over the next three years. a significant portion of this will be on electricity generation as well as the development of transport infrastructure, where rail transport is particularly lacking. a focus on infrastructure not only provides a boost for job creation, but also helps overcome some of the constraints to growth, improves economic efficiencies and increases the potential output of the economy. scope for further macroeconomic accommodation is relatively constrained. the fiscal space achieved by prudent fiscal policies prior to the crisis allowed for a counter - cyclical fiscal policy stance, but this space has been eroded. the budget deficit in the past fiscal year is estimated to have expanded to 5, 2 per cent of gdp, compared with an initial estimate of 4, 5 per cent, mainly a result of lower - than - expected tax revenues. nevertheless the government remains committed to achieving a fiscal consolidation path, and expects the deficit to gdp ratio to decline to 3, 1 per cent by 2015 /

is essential in crisis prevention and management, as already proved by the experience during the global financial crisis. this role has proactively evolved towards mitigating financial system vulnerabilities even in the absence of deposit runs or banks in default. it is now a fact that deposit guarantee schemes mitigated the recent financial crisis, using every possible instrument available to them, such as : increasing the deposits coverage limit ; expanding the scope of the guarantee scheme ; and providing faster deposit pay - outs or even liquidity support. the outcome of these developments is that a new focus is being placed on deposit insurance in the post crisis period. deposit insurance is now considered as an essential crisis management tool and an important instrument for orderly liquidation of an unsound financial institution. a well - designed deposit guarantee scheme largely supports financial stability and financial crisis resolution by mitigating risks of and maintaining trust in the 1 / 3 bis central bankers'speeches financial system. however, recalling one of the most important lessons we learned from the global financial crisis, despite the mandate given to any institution, no player can alone deal with a systemic crisis and the consequences of strong spillover effects and contagion risks. it is essential that each element of the safety net develops robust mechanisms that aim to resolve financial institutions and stabilize the financial system as smoothly as possible, minimizing the cost to the economy. moreover, financial stability can only be preserved by a well - coordinated financial safety net, which is supported by a resilient legal framework, proper tools and instruments and careful contingency planning for each of its elements. the bank of albania has dedicated much of the past 10 years to integrating the lessons learned from the recent financial crises into a new regulatory framework. our financial safety net is further aligned with international best practices, as we coordinate our roles as supervisory authority, lender of last resort and, recently, resolution authority as well. our post - crisis regulatory framework points towards a stronger banking sector, based on a more solid capital foundation that ultimately serves to protect deposits and taxpayers ’ money. in this perspective, the bank of albania has reinforced banks ’ capital position with higher requirements for core capital and is developing new demands for macro - prudential buffers, to build up the lossabsorbing capacity of banks in case of financial crisis. moreover, the financial safety net already in place was further strengthened with a new mandate for the bank of albania as the resolution authority. a transposition of the brrd, the new