3 interest rates in the primary market of government securities ( p. a., in % ) beonia key policy rate interest rate belibor 1w interest rate on deposit facility interest rate on lending facility 1 5 1 5 1 5 sources : thomson reuters and nbs. 2y * 7y 10y 3y 6m 1 5 12m 5y 3m 1 5 1 5 1 5 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 source : ministry of finance. * excluding coupon securities with the rate linked to the nbs key policy rate. lowering of the key policy rate expectedly reflected on a further drop in interest rates in the interbank money market and lower government costs in respect of issued dinar securities. to be specific, the achieved interest rates at the last three auctions of dinar securities with seven -, twoand three - year maturity were lower by 0. 5 to 0. 6 percentage points relative to the previous auctions with the same maturity, which corresponds to the lowering of the key policy rate. hence, the full coordination of fiscal and monetary policy continues. acceleration of credit activity as support to economic activity and a decrease in the npl ratio to its lowest level in the past nine years past monetary policy easing, a fall in the country risk premium, increased interbank competition, economic growth and labour market recovery, as well as low interest rates in the euro area, contributed to credit activity acceleration to 5 % year - on - year in september. excluding the effect of npl write - offs, the recovery of credit activity is even more evident and equalled 9. 8 % year - on - year. chart 4 effect of npl write - offs on lending growth chart 5 npl share in total loans, gross principle ( y - o - y growth rates at the programme exchange rate, in % ) ( in % ) - 5 - 10 - 15 total domestic loans corporates * households * total domestic loans * households corporates 1 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9 source : nbs. * excluding the effect of npl write - offs over the last year. total corporate sector household sector i iii i iii i iii i iii i iii i iii i iii i iii source : n

system raised its funds rate. additionally, bearing in mind the achievements made in the past nine months, we revised upwards our projection of the foreign direct investment net inflow for this year again, from 1. 7 billion euros to 2. 1 billion euros. that means that the expectation is that this year foreign direct investment will be at the level of around 5. 5 % of gdp, exceeding the current account deficit for the third year in a row. at the same time, this contributes to the rebalancing of our economy, leading to more dynamic exports, which record two - digit growth rates, owing to new projects and expansion of the exports base. manufacturing, which is the most propulsive part of our economy, has been recording diversified exports growth of 13. 6 % year - on - year in the first nine months of this year. even though exports increased in almost all areas, the most significant contribution to this growth stemmed from the production of base metals, rubber and plastic products, machinery and equipment and chemical products. in the coming period, the emphasis should be placed on maintaining the achieved results, further improvement of the business ambience and further enhancement of the competitiveness of the domestic economy through structural reforms. further monetary policy easing in the conditions of low inflationary pressures, with the reduction in the cost of government borrowing in the period following the last inflation report, we have lowered the key policy rate two times, in september and october, by 50 basis points in total. hence, the key policy rate was lowered to 3. 5 %, which is its lowest level in the inflation targeting regime. the decision to proceed with monetary policy easing was driven by additionally subdued inflationary pressures, and the fact that resilience of the domestic economy to external shocks increased, owing to favourable macroeconomic performance. low inflationary pressures are indicated by low and stable core inflation, moving around 1. 5 % year - on - year, the same as at the end of the previous year. the impact of the drought on food prices was also less pronounced and the second - round effects on other prices were absent, which is also confirmed by inflation expectations within the target tolerance band. according to our latest projection which takes into account past monetary easing and the public sector wage and pension increase, inflation will continue to trend within the target tolerance band of 3±1. 5 % until the end of the projection horizon. chart 2 interest rate movements ( daily data, p. a., in % ) chart