stronger this year than last, which has a dampening impact on inflation. given our inflation - targeting regime, we will be mindful of the effects of higher interest rates on the krone exchange rate when inflation is low. global growth will also influence oil prices and developments in prices for other commodities. oil prices are high and futures prices indicate that they will remain so. the price of brent blend has averaged close to usd 70 per barrel so far this year. in recent months, the price has been well above this level. gas prices have also increased in recent years, reflecting the rise in oil prices and gas shortages in europe. gas prices fell somewhat in the first half of 2007, partly as a result of the decline in uk gas prices and the fall in oil prices in the first half of 2007. both uk gas prices and oil prices have risen again this autumn. gas prices are expected to remain at a high level, and the price of norwegian gas may rise in the period ahead. a long period of high oil prices has boosted investment in oil and gas activities, leading to a strong increase in domestic activity in recent years. the level of petroleum investment is historically high and the outlook is favourable. the discovery rate on the norwegian continental shelf appears to be high this year. the number of applicants for new exploration activities is unusually high. coupled with high oil prices, these factors will contribute to increased activity on the norwegian continental shelf in coming years. at the same time, the composition of production is changing. oil production is on the decline and has not been lower since 1994. gas production continues to rise, and in 2007 production started on the large ormen lange and snøhvit gas fields. the ministry of petroleum and energy projects that total petroleum production will gradually decline in the years ahead. prices for commodities excluding energy have increased considerably since 2002. the rise in prices was particularly pronounced in spring 2006, when metal prices climbed by a full 45 per cent from march to june. the rise in metal prices has been driven primarily by strong global economic growth, particularly in china and other emerging economies. prices for food and other agricultural products have also increased in recent years as a result of rising production costs owing to higher energy prices. increased demand for biofuel has also contributed as agricultural products and land are used in the production of biofuel. growth in demand for commodities is expected to remain high in the years ahead and supply will probably also increase. prices for metals are expected to fall somewhat

senad softic phd governor, central bank of bosnia and herzegovina conference : macroeconomic imbalances and eu convergence 07 november 2019 welcome speech and opening of the conference dear friends of the central bank of bosnia and herzegovina, distinguished panelists, dear guests, dear colleagues, a very good morning to all of you. it is my great pleasure to welcome you to sarajevo, to another international research conference of the central bank, jointly organized with the usaid finra project. a number of experts have agreed that large macro imbalances were the main cause of the euro area crisis. the eu has reacted with many institutional and organizational changes. this process will continue and our conference hopes to be a part of the efforts to discuss both the macroeconomic imbalances and the eu convergence process. i would mention some of the main macroeconomic imbalances : excessive government deficits and debts, excessive bank credit expansion, stock market and real estate bubbles, and large external account surplus or deficits. all of them can result in serious economic problems if unattended. in bosnia and herzegovina, as you all know, we have a currency board regime. we do not have independent monetary policy, nor can we use nominal exchange rate as a policy tool. if action is needed, we must rely on fiscal policy or use flexible labor markets to bring about the necessary adjustment. fiscal policy options can also be limited, especially if there is a trend of ageing population or decrease in working age population. in the case of structural imbalances, even fiscal policy measures can be of reduced efficiency. policy makers must keep in mind the macroeconomic context. let us take, for example, the annual growth rates of credit in bh in 2006, 2007 and the first half of 2008. just before the global financial crisis ( gfc ), loans to private sector were growing at the rate higher than 30 per cent annually. although it was viewed as a sign of overheating, the policy makers also considered factors such as low initial levels of lending. today, such accelerated credit growth would be considered a serious vulnerability. similarly, the path of the accession towards the eu is bringing structural changes to a candidate country ’ s economy. the convergence process itself will generate imbalances that, if not addressed properly, may be dangerous for macroeconomic stability. if the imbalances are neglected, the country may, at best, stay in the accession process for a long time. during the accession period, the legal framework and