+ reflects the inherent strength of the domestic banking system. the developments of the banking sector have been reflected positively on the performance of the saudi economy. over the preceding three years, gdp ( at current prices ) have increased by an annual average growth rate of 18. 1 %, and private sector gdp by 6. 7 %. money supply has grown by an annual average rate of 12. 9 %, providing adequate liquidity to growth requirements of the economy. looking ahead, the financial system and the banking sector will benefit from the state ’ s efforts to diversify the economy and improve the investment environment through regulatory and structural measures taken in the various sectors. a number of new laws and regulatory guidelines have been enacted to enhance economic growth and achieve further opening of domestic markets. the laws included the foreign investment law, the capital market and cooperative insurance laws and a new labour law. another important development is the kingdom's accession to wto. turning to the capital market, its contribution to the growth of the saudi economy has been clearly evident. over the preceding few years, the market has witnessed remarkable development, and its role as a financial intermediary between savors and investors has been boosted. it would be appropriate to indicate that the recent market correction witnessed by the market has had no adverse consequences on the banks and banking system. this is because sama, through its supervisory functions, has undertaken measures necessary for safeguarding banks and customers against any unfavorable developments in the market. the measures included tightening prudential limits related to lending for trading in the market, issuing controls for consumer loans and other measures which would protect customers and banks against expansion in consumer loans which may end with trading in the equity market. consequently, saudi banks have managed to do well in the first quarter of 2006. as the shares market stabilizes and continued good performance by banks is maintained, it is expected that the financial system will greatly benefit from the efforts of the authorities to deepen and broaden the capital market. now let me briefly touch upon the opportunities for the saudi banks over the medium term. 1. the saudi economy is undergoing unprecedented boom era based on a well - developed and diversified base covering all sectors of the economy, including oil and gas, heavy, medium and light industries ; banking, investment and insurance services ; and transport and tourism, within a population demographic structure which indicates an expected growth in the segment that would need banking services. these entire factors make the banking and financial services market poised to grow

if we seek to align with international leaders, we must take care not to get stuck with what has been designed so far. having said that, i hasten to assure everyone that we believe stability to be the greatest virtue of the pension system. still, the lithuanian pension system will require three further improvements. the first one should ensure a closer and definitely more obvious connection between contributions and benefits. this is an essential condition both for achieving pension - system fairness and for strengthening incentives for residents to pay contributions. the second aim is greater transparency. having strengthened the connection between contributions and benefits, the first pension pillar should shift towards a model based on individual accounts ( notional defined contribution model ) – like the one currently in operation in sweden, norway, poland and other european countries. such a system, ideally operating in real time, would clearly show the correlation between one ’ s 3 / 4 bis central bankers'speeches social insurance contributions and the level of his or her future pension. a virtual individual account would demonstrate that unaccounted income reduces the accumulative pension in the first pillar, thus encouraging the payment of contributions. the third direction concerns information and education. clear communication on the old - age saving system is one of the most reliable means for managing risks of short - sighted choices. and – let ’ s face it – there is such a threat if, after the entry into force of the approved changes of the pension system, people decide to opt for slightly higher income today, rather than in the future. currently, these are the three missing pieces of the puzzle of the lithuanian pension system. colleagues, i do not wish to be a prophet of doom, but the risks facing the lithuanian pension system are very real. unless we accomplish urgent work, we will soon face them – if not just round the corner, then around another couple of turns. in order to create a truly sustainable – and i insist sustainable in the long run – pension system in which lithuanians will have trust, we must strive for consensus, consistency and determination for further steps. today, we have the opportunity to talk about these issues boldly, openly and in good faith. i wish you all fruitful discussions and valuable insights, which may contribute to future policy decisions. thank you. 4 / 4 bis central bankers'speeches