to 15 percent in december. correspondingly and as appropriate, commercial bank prime lending interest rates mirrored the bank rate adjustments ; in addition, the management of excess bank liquidity reinforced the policy stance. nevertheless, high inflation resulted in lower real interest rates, some of which, unfortunately, became negative in real terms. with respect to the bank ’ s outlook for inflation for this year and a reasonable period ahead, both domestic and global inflation is expected to abate, as a result of lower economic activity and subdued demand. commodity prices, including the cost of oil, are likely to be low, and world inflation is forecast to decrease from 6. 4 percent in 2008 to 3. 1 percent in 2009. in south africa, inflation is expected to decline to 5. 5 percent in 2009, and fall within the 3 - 6 percent target range. therefore, foreign prices will dampen domestic inflation. since the bank ’ s inflation objective is 3 - 6 percent and trading partner countries ’ inflation is forecast at 3 - 5 percent, the downward crawl of the pula should be marginal in 2009, and the real effective exchange rate should be stable. overall, economic performance is expected to slacken significantly, due to the depressed mining activity. it is also anticipated that despite the decline in government revenue, due to a fall in mining production, public spending will increase in support of economic growth. nevertheless, it is estimated that output will be below trend, particularly in the short term. this should put downward pressure on inflation. in this environment, it is unlikely that increased government spending will be inflationary, particularly in the absence of a public sector wage increase. however, it is worth mentioning that any large increase in administered prices, such as electricity tariffs and botswana housing corporation rentals, would be inflationary. be that as it may, the probability is that price increases will be subdued in 2009 compared to 2008. it is, therefore, anticipated that, by the end of the year, inflation will be closer to, if not within, the medium - term objective range of 3 - 6 percent. honoured guests : you may very well ask : what about the monetary policy stance in 2009 in the circumstances! well, we at the bank consider that monetary policy action this year will take into consideration the following scenarios : first, the increase in government spending is unlikely to be inflationary ; second, the exchange rate is expected to be stable ; and third, it is hoped the inflation trend will continue to be downward. these developments

of responsibility, and in a good number of financial and non - financial businesses, disregarded these cardinal guiding principles of good corporate governance and conveniently forgot that what is legal is not necessarily ethical. in the end, the financial and economic structure could not bear the weight of accumulated lapses ; so, it collapsed. while all this is now water under the bridge, it has been recognised in some quarters that the international accounting standards contributed more than their fair share to the financial crisis. it is pointed out that one new standard abandoned the traditional prudent principle of historical asset valuation and replaced it with a highly subjective and pro - cyclical “ fair value ” concept. as a result, brokers, analysts and investment bankers abused the standard. the upward movement of stock prices immediately inflated balance sheets which, in turn, further inflated the asset price and, when the economic downturn set in, the bubble eventually burst. it was known that the paper profits resulting from inflated asset book values could not be realised ; and yet banks and other non - bank institutions took inordinate debt issuance risks. in addition, the “ fair - value ” principle was not much understood by the market, and was not transparent. in the event, balance sheets were hardly a useful basis for decision - making by economic agents. the far reaching economic and social consequences of this accounting practice are now a matter of record. distinguished ladies and gentlemen, it has been said that war is too serious a business to be left to the generals only. likewise, it is now widely recognised that accounting is too important a profession to be left to accountants only. indeed the united states of america and the european union recently took measures to “ soften ” or dilute, as it were, the deleterious effects of “ fair - value ” accounting practice in financial institutions. another emerging change is the call for more disclosures in accounting standards with which those of us outside the profession are grappling, obviously with the helping hand of accountants. long gone are the days when accountants confined themselves to the boring ivory tower of “ number crunching ” or, as at times pejoratively referred to, “ bean counting ”. in fact, it has been said that accounting has now entered a golden age ; an age of the changing role of the accountant ; an age of wide - ranging roles that include professional business advice, planning, reporting, identification of value drivers and risk mitigation. in particular, it is increasingly desirable that the