some fiscal strains, it is hoped that there will be no directional change. the annual rate of growth in broad money ( m3 ) was 22. 3 per cent in 1994 - 95, but dropped subsequently, pulling down the annual average growth rate between 1994 - 95 and 199697 to 17. 3 per cent and in the current year it should be around 15. 5 per cent. there is a similar pattern in regard to inflation, which averaged 7. 4 per cent between 1994 - 95 and 1996 - 97 and the wholesale price index this year is estimated to be around 6 per cent, less than last year ’ s 6. 9 per cent. finally, non - food credit growth has averaged 21 per cent per annum in the last three years and this year it is expected to be around 20 per cent including investments in psu and corporate bonds, debentures and cp. as you may be aware, the latest cso estimate places gdp growth of 1996 - 97 at 7. 5 per cent and net capital inflow from abroad for the last two years has been placed at 1. 86 and 1. 15 per cent of gdp at market prices. external sector on the external front, in sdr terms, exports have grown at 13. 6 per cent and 16. 7 per cent during 1994 - 95 and 1995 - 96 while imports have grown at 18. 0 and 23. 7 per cent. last year, ( 1996 - 97 ) there has been a deceleration to 9. 6 and 10. 6 per cent, respectively. this year, during april - december, growth of exports was 9. 1 per cent and that of imports 13. 5 per cent, both in sdr terms. the foreign direct investment flows continue to rise and are us $ 2. 5 billion during april - december 1997 - 98 as against $ 2. 7 billion during the whole of 1996 - 97. more important, the policy framework and the procedures ensure that most of the value of fdi flows to infrastructure and productive sectors. fii investments during the current year so far are less compared to $ 1. 9 billion for the entire 1996 - 97 period ; but, it is expected that it would be at least $ 1 billion during this year. the flows on account of external aid last year, commercial borrowings and non - resident deposits are positive on a net basis, and broadly as per expectations at the beginning of the year. the invisibles have also been on track and as a result, the

been made over the past few years in rehabilitating the banking sector and encouraging foreign ownership. the latter has also contributed to greater integration into the eu financial system. nevertheless, adapting the legal and regulatory framework is a process entirely in the hands of the accessing countries. the intermediation role of the banking sector remains fundamental for the efficient use of capital and sustained growth. progress in corporate governance, the enhancement of the legal and supervisory frameworks that support the banking sector, and an efficient fight against money laundering, are also crucial. these improvements are conducive to achieving the macroeconomic objectives of the accession countries. • fifthly, central bank independence is of the essence. it is an integral part of the acquis communautaire, which is laid down not only in national legislation but above all in the maastricht treaty. the effective implementation of the acquis communautaire is not only a legal prerequisite for accession to the eu. it also implies the effective transformation of accession countries ’ economic framework, which should facilitate their integration into the eu and, later, the euro area. in this context, it should be ensured that there is no discrepancy between the central banks ’ formal status in the legislation and the implementation of that legislation. it is of utmost importance that all present and future member states respect this economic and institutional ground rule of the european framework. • sixthly, let us not forget the present and future contribution of central and eastern european countries to the economic prosperity of europe at large. it seems that this contribution might be sometimes underestimated, while the relative influence of the us economy, for instance, might be sometimes overestimated. in fact, transition economies, as a whole, are as important as the us in terms of external demand addressed to the euro area : they both enjoy the same share, i. e. 13 % of our exports. and, during the last two years, transition economies contributed for two - thirds to the overall growth of our total external demand, while the us contributed for less than 0. 1 %. more generally speaking, central and eastern europe countries are already major contributors to the overall growth on the european continent. in 2001, despite the international context, they remained at quite high a level of growth, around 2. 8 %. this contribution is bound to further increase given these countries ’ considerable potential for growth. i thank you for your attention.