than ever. it is an opportunity for the trained insurance professional to give advice to his customers on their financial management. it builds relationships, helps the customer to make the right decisions and opens opportunities for future business with the now better informed customer. in every circumstance we must look for the opportunity. in conclusion, i would like to leave you with some words of encouragement. although the challenges that lay ahead seem a bit daunting, barbados ’ financial system is currently well positioned to cope with them. furthermore, the bank continues to stand ready to do all within its power to ensure that we ride this global crisis out with as minimal damage as possible. with the continued solid cooperation of the other regulators and the wider financial community, we expect that, despite a couple hiccups, the barbadian financial system will continue to be recognised for its soundness and stability and the insurance sector will continue to thrive.

##flows to barbados slowed, shrinking the capital and financial account surplus to the point where it is no longer sufficient to finance the deficit on the current account. consequently, we have seen a reduction in the stock of net international reserves ( nir ). the bank has not sat idly by during this upheaval and has even been somewhat aggressive in its response. we have so far lowered the minimum deposit rate by a cumulative 225 basis points. our policy rate now stands at 3. 00 % compared to the 5. 25 % it was when the extent of the international economic upheaval first became clear in 2007. in fact, the bank instituted its first interest rate reduction in november 2007 and has gradually lowered not just the minimum deposit rate, but also the discount rate and has implemented a repurchase facility to provide even further assistance should any commercial banks face liquidity constraints. in line with our interventions, the market seems to be responding in kind, as evidenced by lower deposit rates and consequently lower lending rates. the prime lending rate now stands at 9. 00 % compared to 10. 15 % at the end of 2007 while the rate on 3 - month treasury bills has declined to 3. 84 %, a full 100 basis points below where it was at the start of the bank ’ s intervention. the rates on new government debentures and treasury notes have also been falling. this current environment may present some difficulties with respect to the search for strong returns, and i would like to take this opportunity to encourage the financially savvy amongst us to continue to embrace the challenge to create new and attractive investment instruments. there are always projects in need of financing and, in light of the lower cost of borrowing, it is perhaps the time for these projects to turn to institutional investors for their funding. impact on the domestic economy as can be expected the deteriorating economic conditions in barbados ’ main trading partners are being reflected in the performance of key sectors of the domestic economy. in addition to the tourism industry, the impact on the construction sector is a matter of concern in light of its critical role in supporting employment. overall therefore, domestic economic activity has slowed markedly in response to the global slowdown, following five consecutive years of above - average growth. this has been reflected in a reversal of employment trends and led to an uptick in unemployment. economic prospects looking forward, the international prospects for 2009 are not very encouraging. the imf is projecting a deceleration in global growth this year to just half a