The ratio of current account deficit to GDP is 11.8 percent in Bulgaria, 8.7 percent in Romania, 7.9 percent in Hungary and 7.2 percent in the Slovak Republic 1 . Another point that I would like to highlight about the current account deficit is that sustainability of high current account deficit depends on the financing quality of the deficit. Within this framework, I would like to present some figures on the maturity structure of capital inflows to Turkey. In April 2006, net capital inflow excluding IMF credits was USD 53.6 billion. The share of direct foreign investments and long-term capital in financing of current account deficit increases rapidly. In April 2006, long-term capital inflow became USD 23.2 billion and credit utilization of the non-banking private sector became USD 21.1 billion. The primary source of the capital inflow was long-term capital and credit utilization of the non-banking sector; 85 percent of which was long-term. Making a projection, we expect this financing structure to continue. According to the “Foreign Direct Investment Confidence Index”, which questions the countries’ capacity to attract investments over a 13 year period and which is an indicator of foreign direct investments that will come to the country, Turkey was the 13th most attractive foreign direct investment destination among 25 countries in  1  IMF, World Economic Forum, April 2006. BIS Review 68/2006  7  2005 2 .
Before all else, the point that I would like to emphasize is that our inflation targets are point targets. These targets have been set as consumer price index inflation. Our policies are established solely with the aim of achieving these targets. In our monetary policy implementations, we have announced our inflation targets for a three-year period in order to increase the emphasis placed on medium-term. In this context, the inflation target is 5 percent for 2006 and 4 percent for 2007 and 2008. To apply a rule to the Central Bank’s accountability in the event of any deviation or the possibility of deviation from the inflation target, a + 2 point-uncertainty band has been established around the point target. Once again, I would like to underline the significance of this issue. This band, which has been formed around the inflation target, aims at setting the accountability criteria. Looking at the practices around the world, we see that a 40 percent-uncertainty band has been formed around the point target in most countries. Our implementation is based on this approach. In the event that inflation is realized outside this band or, in case of such a possibility, the mechanisms specified with respect to accountability will start. With the introduction of the formal inflation targeting regime, interest rate decisions are made by voting at the Monetary Policy Committee meeting. Monetary Policy Committee meetings are held once a month on pre-announced dates. Nevertheless, when deemed necessary, extraordinary meetings may be held, such as yesterday’s meeting.