see gdp fall by 1 per cent at annual rates in the second quarter, and then grow by 3. 5 per cent in the third quarter as oil production resumes, rebuilding around fort mcmurray begins and the new canada child benefit lifts consumption. in fact, fiscal measures, including infrastructure spending, provide an important support to growth over the forecast horizon. we have always said that the adjustment to the oil price shock would be a complex process. and we see evidence that these adjustments are happening, thanks to the resiliency and flexibility of the canadian economy. on the energy side, firms have been quick to cut back investment plans and reduce costs. by the end of the year, we expect these reductions to be largely over. on the non - commodity side of the economy, we have also seen evidence of adjustment, but it has been more uneven. export data have been particularly volatile, and it is very important for us as policy makers to assess underlying trends. what we see is that non - commodity exports over the past couple of years have been responding largely as expected to growth in foreign activity and the canadian dollar. businesses are telling us that they are benefiting from stronger demand and a lower dollar. we have a great chart in the mpr that shows that bis central bankers ’ speeches non - commodity exports have recovered almost to their pre - recession peak, which puts the recent volatility into proper perspective. exports are projected to grow in line with the us economy over the projection period. we are being conservative by assuming that exports only make up part of the ground lost over the past four months. the past depreciation of the exchange rate will continue to support the level of exports, but its effect on export growth is projected to taper off over the course of this year. growing demand for canadian exports should lead to increased investment and new businesses being created. the question for monetary policy is when and by how much. governing council still believes that investment will be needed to expand productive capacity as both foreign and domestic demand increase. you can see that this rebuilding process is well under way in the united states, and we are seeing early signs that new firms are also being created in canada. that said, our profile for investment, while still positive, is lower than in april. that is because investment data have continued to disappoint and some businesses are telling us that they remain cautious. let me make a point about the lower investment profile. it does not just mean slower growth in gdp

new risk - based capital ratios and more - extensive information about credit quality of their portfolios and their risk measurement and management practices. other disclosures include : corporate structure, market risk disclosures for standardized and internal models approaches, disclosure for operational risk measurement, interest rate risk and foreign exchange risk. such disclosures are expected to encourage banks to be more transparent to financial markets which should then promote market discipline. uganda ’ s preparedness the key element that countries should consider before moving on to basel ii is whether a good baseline supervisory system is in place. that is, whether the basel committee ’ s basic core principles, including its preconditions – have been complied with. for uganda, the answer to this is in the affirmative. yes, we have a good baseline supervisory system in place. the major milestone that enabled uganda to move towards full compliance with the basel core principles was the enactment of the new financial institutions act ( fia, 2004 ). in addition bank of uganda fully shifted to the risk based supervision approach since january 2003. the fia, 2004 allows bou to prescribe higher on - going capital requirements for a specific financial institution if the supervisory review process reveals existing risks that warrant such increases which is in line with pillar 2. the fia, 2004 also outlines some disclosures including a prescription for the form and content of the annual accounts which provides a good ground for pillar 3 under the new capital accord. many aspects and possible effects of basel ii have been debated at various levels, including its potential effects on banks ’ costs and on the competitive positions. such costs include : revamping the it systems and or acquisition of new systems, training costs for staff and additional staffing needs, insufficient historical data, time consuming transitions, internal models and risk quantification costs and disclosure overload. as to whether these associated costs will be transferred to the beneficiaries of financial services remains a subject for research and discussion within the sector. thank you!