This Annual Report provides a detailed account of economic, monetary, and banking developments and policy responses adopted in 1997/98 with all facts, analyses, and policies are presented objectively. However, in light of the numerous facts and analyses as well as the complexity of the problems, care is required when making association between one factor policy and another. On this occasion, as foreword, the writer wish to draw the readers attention on several pivotal issues worth serious consideration so as to comprehend the economic developments and policy responses as well as chalenges and policies to be pursued in the period ahead.