a solid basis for loan qualification is and should be exclusively past and expected fully declared net - income both for companies and for individuals. this can be vital information for loan approval and interest rate pricing. by increasing financial literacy of potential financial products consumers in this area, we can significantly influence the decrease of so called “ gray economy ” with a positive impact on tax collection, budget deficit and accuracy of economic data in the system, and therefore, future efficiency of economic policies. that is why it is very important in this respect as well, to increase financial literacy so as to make people fully understand and realize that fully declared and legal cash - flow is a primary prerequisite for individuals and companies to successfully qualify for banking loans. another, similar aspect is making people fully understand the role and significance of credit bureaus. by obtaining information from credit bureaus on total borrowing and bill paying habits for corporate and individuals, lenders can obviously better assess credit worthiness of a potential borrower. this can in turn influence the decision to lend or not to lend, and can affect the interest rate and other terms of a loan. consumers must be aware that interest rates are not the same for everyone, and are, as a rule, determined by risk - based pricing. obviously, highly leveraged consumers with poor credit repayment histories will pay a higher annual interest rate than consumers with lower overall debt and good payment habits. full awareness of these simple rules in finance and maintenance of good credit profile in a credit bureau can potentially decrease the overall leverage in the economy, keep the npls under control, help avoid the creation of asset bubbles and avoid unnecessary overdue payments court procedures. again, financial literacy in this domain can protect both the lenders and the consumers, avoiding unnecessary shocks to the financial systems as a whole. closely related is understanding the importance of full legalization and registration of real estate properties as a common collateral for mortgage lending. again, this is an area that should be very important for financial literacy and education providers. the task is particularly vital in see and other transition and post - transition countries where public awareness of the importance of registering real estate is not so developed in comparison to the rest of europe and developed world economies. lack of understanding and the significance of real - estate registration, can have serious economic repercussions ; most importantly, the inability to guarantee any obligations with one ’ s property. this would pose a particular problem for enterprises as loans are, in most cases, one of the most crucial

) equalled 7. 4 % in 2017, with corporate lending rising by 4. 3 % year - on - year. excluding the effect of the write - off of non - performing loans in the past year, the recovery of lending activity is even more evident – it rose by 10. 2 % year - on - year, with corporate loans up by 7. 4 %. in addition, the resolution of the issue of non - performing loans was stepped up. their share in total loans fell below the pre - crisis level and their stock in the past two years more than halved ( a drop of 53 % ). this provides additional support to lending activity and economic growth going forward. chart 9 interest rates on new dinar and euro - indexed loans to corporates and households * chart 10 lending activity and gdp ( y - o - y rates, in % ) ( weighted average values, p. a., in % ) - 1 - 5 - 2 - 3 - 10 - 4 dinar household loans ( lhs ) dinar corporate loans ( lhs ) euro - indexed household loans * * ( rhs ) euroindexed corporate loans * * ( rhs ) 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 total domestic loans * ( lhs ) total domestic loans * * ( lhs ) real gdp ( rhs ) - 15 - 20 - 5 - 6 i ii iii iv i ii iii iv i ii iii iv i ii iii iv i ii iii iv i ii iii iv 2012. 2013. 2014. 2015. 2016. 2017. sources : nbs and sors. * excluding the exchange rate effect. * * excluding the effect of npl write - off in the past year. source : nbs. * excluding revolving loans, current account overdrafts and credit card debt. * * * consistent with our estimates, gdp growth has gained ground with the gradual waning of supply - side shocks. in the fourth quarter, it accelerated to 2. 5 % year - on - year, underpinned by faster growth in construction and the majority of service sectors. manufacturing continued to provide a positive contribution, while agriculture, due to a bad agricultural season, recorded an expected slump. on the expenditure side, growth accelerated the most on the back of private investment, supported, among other things, by the high inflow of foreign direct investment. our new projection