the 2001 crisis. the declining public debt burden and the diminishing fiscal dominance in turkey put an end to the crowding - out of the real sector. that boosted the supply of loanable funds. banks have returned to their traditional role of financial intermediation instead of financing government expenditures. share of public securities in turkish banking sector assets declined by onethird to 28 % in the last 5 years ; while share of credits to private sector more than doubled and reached to 49 % during the same period. the credits extended to the small and medium enterprises by turkish banking sector have also increased significantly to usd 95 billion as of 2007. this corresponded to almost 20 % of the gdp. as a further note, 32 % of these credits were in the category of credits extended to micro enterprises. the ratio of private sector credit used by households and firms to gdp has also rapidly increased, though it is still low in international standards. of course, raising the share of private credits in the financial system does not necessarily mean that each and every segment of the population would gain access to financial services. the low - income segment of the society, in particular, may not have access to capital and that would have two principal adverse effects. first, they may not be able to raise the expected value of their income and therefore of consumption and future investment and asset accumulation. second, due to lack of access to credit, the poor would face high variation in their income and consumption, and the downward risk on income threatens their ability to satisfy basic consumption needs. increasing the funds available for entrepreneurs that have micro - scale business plans but do not have access to credit, have merits such as contributing to the production level and unemployment ratio while also strengthening the social structure of a country. of course, it should be noted here that while the benefits from financing these activities are more or less common, selection of main business areas where these funds should be used obviously depends on country specific circumstances and needs. dear guests, in the last part of my speech, i would like to share with you my thoughts on the external sources of “ access to finance ”. as i touched upon initially, financial innovation and financial integration have led to explosive growth in the international movement of capital. these flows serve as an important catalyst for domestic financial market development, as reflected both in the size of the banking sector and equity markets, as well as the quality of institutions for supervision and regulation. in recent years, attention has been given on how macroeconomic policies should respond

. accordingly, the composition of domestic demand secures the simultaneous achievement of rapid growth and disinflation. ( iii ) although the strong position of the ytl against foreign currencies is a factor that supports domestic demand growth, it restricts the impact of rapid growth on prices not only by its direct effect on prices but also by stimulating investment demand, which in turn induces productivity gains. graph 13. output gap ( percent ) - 2 - 4 - 6 - 8 06 - i 05 - iii 05 - i 04 - iii 04 - i 03 - iii 03 - i 02 - iii 02 - i 01 - iii 01 - i 00 - iii 00 - i - 10 source : cbrt. despite the fact that the recent data provide signals for an ongoing strong course of domestic demand, within the framework of non - inflationary rapid growth analysis explained above, the output gap is expected to support the disinflation process in the first half of 2006 as well. nevertheless, our view that the contribution of supply - demand conditions to the disinflation process has diminished is still valid. foreign demand the current account, which was usd 15. 6 billion in 2004, reached usd 23. 1 billion in 2005, realizing 6. 4 percent of the gnp ( graph 14 ). the upward trend in the current account deficit continued in the first two months of 2006. graph 14. current account balance / gnp ( annualized, percentage ) - 1 - 2 - 3 - 4 - 5 - 6 05 - ii 04 - iii 03 - iv 03 - i 02 - ii 01 - iii 00 - iv 00 - i 99 - ii 98 - iii - 7 source : cbrt. in 2005, while the rates of increase of both exports and imports weakened compared to 2004, the rate of increase in exports remained well below the rate of increase in imports in the second half of the year. the said tendency continued in the first two months of 2006 as well ( graph 15 ). the decline in textiles and apparels exports on an annual basis since november 2005 has had an unfavorable impact on general export performance. while rapid economic growth leads to an increase in the imports of intermediary goods, the rises in oil prices boost the amount of imports infused terms. graph 15. imports and exports ( * ) ( billion usd, annual percentage change ) imports exports jan - 06 nov - 05 jul - 05 sep - 05 may - 05 mar - 05 jan - 05 nov -