a deficit of around 0. 11 % of gdp in 2009. global fund flows are estimated to return to normal in 2009. however, there is one particular note for indonesia. if the experience of the 2004 general election reoccurs this year, namely a safe general election that results in the formation of credible cabinet, then during the fourth quarter there will be relatively large inflows of funds. the majority of such funds belong to our nation ’ s citizens, temporarily placed abroad while awaiting confirmation of the domestic political situation. based on our calculations, foreign reserves by the end of 2009 are estimated at usd51 billion ; adequate to finance 4. 7 months of imports and government foreign debt repayments. in the banking sector, stress tests indicate that the resilience of our domestic banking industry is sufficient. in 2009, the capital adequacy ratio ( car ) is estimated to decrease slightly from 16 % in 2008 to 14 %. from regulatory capital point of view, this ratio is still well above its minimum limit. however, from the economic capital view, this development should be anticipated in a timely fashion. a declining capital adequacy ratio indicates the reduced ability of banks to absorb various risks and expand credit. therefore, i would like to see efforts to reinforce bank capital remain as our primary focus in the future. bank indonesia will continue to closely monitor the development of capital at each bank. we are all aware that without safe and adequate capital, the bank intermediary function will not run optimally, and industry resilience to inauspicious conditions, such as now for example, will be undermined. based on current capital strength and contradictory to credit growth in developed countries such as in the european union and united states, where a downturn was experienced in 2008 and perhaps negative growth will prevail in 2009, credit growth in indonesia in 2009 is estimated to remain in the range of 18 % - 20 %. yet the downside risks are relatively large. meanwhile, slow economic growth will precipitate a rise in npl to around 5 % in 2009, which is still considered within safe boundaries. it is important to be aware that liquidity in our banking system is currently adequate. this is evidenced by large placements in bank indonesia certificates by indonesian residents ; now totaling rp200 trillion, and undisbursed loans of rp253 trillion ( november 2008 ). this large liquidity pool indicates that our economy is not suffering from a liquid

assets quality, legal lending limit, foreign borrowings, and asset securitization ; third, measures to improve consumer protection through certainty in the application of standard, secure, and transparent banking services. this objective will be achieved through the issuance of bank indonesia regulations relevant to consumer protection and transparency of banking products. fifth, bringing the national banking industry to international standard of capital adequacy according to basel ii principles. the adoption of basel ii will commence in 2008 by applying standardized models. by adopting this consolidation policy, we believe that the indonesian banking system will consist of banks with strong commitments and capacity to play an optimum role in the national development process. ladies and gentlemen, financial sector outlook in line with improving economic performance as well as a strong banking performance, bank loans are projected to expand about 20 % in 2005 ( or about rp106. 2 trillion ). based on our projection, banking sector will have adequate capacity to expand loans as targeted without impeding their capital adequacy and liquidity. with loan growth of 20 % - 23 % and deposit growth of 6 % - 7 % in the next three years, the cars of banks are projected to stay at 16 % and ldr will be approaching 100 %. in addition, higher international commodity prices ( especially primary non - oil / gas commodities ) resulting from rising demand in export markets would have a positive impact on the domestic business climate, which raise demand for loans. as i have mentioned earlier, we have so far achieved significant progress in putting in place the foundation for economic stability and financial system more in line with challenges in the years ahead. however we are also aware that in our path toward achieving the objective of a more satisfactory financial and banking sector requires time. we are entering a crucial period in the process of transition toward a better future of banking system. the process of consolidating the national banking industry is an objective that we cannot compromise if the stability and resilience that we desire for the banking system is to be achieved. we must all take note, first of all that the coming years will be no time for complacency. before us lies only one choice, to work hard to fulfill the commitments and sincere intentions to restructure whatever needs to be put right. we should no longer feel comfortable watching as the various problems unfold within our banking industry. in fact, we as the banking authority see that much remains for us to do to be able to meet this demand. the