The higher purchase of foreign currency on the foreign exchange market acted towards increase in the NBRM gross foreign exchange reserves. On December 30, 2000 they 1 reached USD 713.6 million, thus increasing by USD 235.5 million compared to the end of 1999 . In 2000, the upward trend of the deposits with the banks continued due to the gradual strengthening of the confidence of the economic agents in the banking sector. Thus, on annual basis (December 2000 / December 1999), the total non-government deposits with the money deposit banks increased by Denar 6,906 million, or by 23.1%. In addition, the foreign exchange deposits registered more intensive growth of 49.1%, while the Denar deposits increased by 13.9%. Analyzed by maturity, both short-term and long-term deposits increased by 27.0% and 4.4%, respectively. It should be underlined that in 2000, the banks’ credit activity registered considerable expansion. Thus, in December 2000 relative to the same month of the previous year the total banks’ credits in favor of the non-government sector (according to the actual balance) increased by Denar 6,042 million, or by 17.2%. A good and close coordination between the monetary and fiscal policy created a room for such an increase in the credits, significant increment in the liquidity of the banks, removal of the credit ceilings by the NBRM and increased banks’ deposit potential. With respect to the currency of denomination, the increment in the total banks’ credits is solely due to the increased Denar credits, whereas the foreign currency placements registered a fall.
In 2000, relative price stability was achieved and the inflation rate on annual basis (December 2000 / December 1999), measured through the retail prices index equals 10.8%. Measured through the costs of living index, as agreed with the IMF arrangement, the inflation in 2000 equaled 6.1%. In 2000, compared to the previous several years, the inflation is higher, however it should be underlined that the reason for that is not the monetary policy, but the impact of the non-monetary factors. These factors are the following: •  one-time effect of the introduction of the value-added tax on prices;  •  increase in the price of oil on the world markets, accompanied with the appreciation of the US Dollar;  •  increase in the price of electricity and maintaining higher tariff for calculation of the price of the electricity;  •  increase in the prices of particular services which are under direct control of the government  However, it is crucial that the potential fundamental generators of inflation such as the monetary policy, the fiscal policy, the exchange rate and the wages remained under control and coordination. Therefore, the Central Bank considers that the impact of the non-monetary factors that gave rise to the inflation in 2000 are of temporary character and that in 2001 the inflation will get back to the level from the previous several years.