The rate of depreciation of the rand in recent weeks is of increasing concern. The volatility and depreciation of the rand is taking place in a world where the economic outlook remains of great concern. While a slowdown was evident prior to the tragic events of September 11th, subsequently world economic forecasts have been consistently revised downwards. Increased risk aversion and growing negative sentiment towards emerging markets have been further fuelled by the Argentinian crisis. In our own region, events in Zimbabwe have also impacted negatively. Despite the changing world environment, the economic fundamentals in South Africa remain sound. Fiscal policy objectives are being met: the budget deficit remains modest at 2,3% for the fiscal year; growth is expected to be over 2 per cent, a healthy number in the current global conditions; expenditure is well within budget while revenue collections continue to outperform expectations.Furthermore, the Medium Term Budget Policy Statement, tabled in Parliament in October 2001, provides for a growth-oriented fiscal stance. Government spending is projected to grow at an average of 3,7 per cent per annum in real terms over the next three years. These increases in spending will be focused on improving social services and infrastructure. We have also committed ourselves to the continued easing of the tax burden, particularly for those in the low and middle income brackets. The more expansionary fiscal policy will be achieved within prudent deficit targets - 2,6 per cent for 2002/3, and falling to 2,2 per cent by 2004/5. It is worth reminding ourselves that the years of fiscal consolidation mean that overall levels of government debt, as well as the interest burden, will continue to fall as a percentage of GDP. South Africa's public finances are exceedingly sound, and will make a positive contribution to growth.Monetary policy objectives remain firmly in place: price stability within a growing economy, and a commitment to ensure a downward trend over time in inflation. The goal set is CPIX inflation of between 3-6 per cent on average in the year 2002. Thus only at the end of the financial year 2002 can it be determined whether the target has been attained or otherwise. Furthermore, it remains unclear at this stage where the exchange rate of the rand will stabilise.Recent price moves have undoubtedly been exacerbated by seasonally thin markets. In this regard the feed through into inflation of the current depreciation, and any potential impact on CPIX, has yet to be determined. This will be influenced by a range of factors, but may be ameliorated to some extent by the depressed world economic environment and the continued decrease is import prices. Therefore statements that the inflation target will be missed are premature.The concerns expressed by many South Africans about the potential impact of higher food prices are recognised. Producers, including those of maize and wheat, benefit from a range of favourable concessions from government. It is therefore with great concern that we observe what appears to be opportunistic pricing which is unnecessarily driving up inflation. We will carefully monitor this situation on an ongoing basis, and take remedial measures if warranted.Government policy of gradually liberalising exchange controls, as and when circumstances permit, remains firmly in place. However, enforcement is receiving special attention. In particular, the foreign currency accounts Authorised Dealers open for importers and exporters (compliance with the 180day rule) will be more rigidly enforced through inspections. Contravention will be dealt with in terms of the penalty provisions in Exchange Control regulations.South Africa's financial institutions remain sound, with only a small percentage of their financing originating offshore. Ratios for non-performing loans and provisions for bad debts are well in excess of international norms.Over the past three years we have considerably reduced government's vulnerability to exchange rate movements. The NOFP is down to $4,8bn fr