would opt to hedge against inflation. ultimately, this leads to a reduction in the availability of loanable funds and investments. in addition, high inflation is normally associated with high interest rates and high interest rates inhibit borrowing for investment purposes, thereby slowing down economic growth and the development process ; 2. rising prices erode the public and investors ’ confidence in the economy and contribute to rapid exchange rate depreciation. this leads to currency substitution or dollarisation, which in turn, reduces the effectiveness of monetary policy ; 3. rising prices also undermine the country ’ s external competitiveness, which may lead to a decline in export earnings, thus, worsening the balance of payments position of the country ; and 4. rising prices entrench poverty through the erosion of peoples ’ incomes, particularly those on fixed incomes. therefore, high inflation is a major source of concern to the central bank as it poses a threat to general economic development. with regard to the real estate sector, high inflation will affect the cost of property. in the case of the low income group, high inflation will make real estate prices unaffordable. apart from inflation, there are other financial prices which are of great concern to the bank of zambia, especially in our efforts to stabilise the macro - economy. one such financial price is the level of interest rates. interest rates, being the cost of funds, can inhibit borrowing for investment in real estate if they are too high. inflation also affects the level of interest rates. to this effect, lowering of interest rates requires that all key stakeholders play their respective roles effectively and consistently. the government, by reducing domestic borrowing, contributes to the lowering of yield rates on government securities, which are often used as anchors by commercial banks in setting their interest rates. commercial banks are, on their part, also expected to respond favourably to improving macroeconomic conditions consistent with low interest rates, while borrowers need to improve their credit culture. as for the bank of zambia, the greatest contribution we can make to the lowering of interest rates is reduction of inflation to single digit levels. in this regard, the bank will continue monitoring financial conditions and take appropriate actions to contribute to the lowering of lending interest rates. exchange rates are yet another financial price that should be stabilised to effectively contribute to the promotion of the growth of the real estate industry, particularly that a substantial amount of building materials, such as, steel are imported. an unpredictable behaviour of the exchange rate can make investment in real estate unatt

rasheed mohammed al maraj : gulf executive development programme speech by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the gulf executive development programme graduation ceremony, manama, 30 april 2007. * * * members of the steering committee, distinguished guests, programme graduates, ladies and gentlemen : good evening. it gives me great pleasure to welcome you all here this evening, and to publicly acknowledge both my own support and that of the central bank of bahrain for the gulf executive development programme. this graduation marks the 9th such programme to have been completed – its continued popularity, in my view, clearly shows the inherent strengths of its offering, and the commitment of all its sponsoring organizations. let me begin, however, by first acknowledging the success of tonight ’ s graduates. all study programmes which have to be combined with full time employment represent unique challenges, in terms of time - management and commitment. these challenges are all the more acute when the programme is at an advanced level, such as the gedp. congratulations, therefore, are richly deserved for all of you graduating tonight, for your hard work and perseverance. of course, armed with your new qualification, even more will be expected of you. but i am confident that, having successfully completed this challenge, you will move on to even greater professional success in the years to come. i am sure that after your studies, you appreciate that true education isn ’ t so much about knowing all the answers, but knowing what questions to ask ; and that true leadership requires the exercise of responsibility, not just of authority. remember also that success is measured as much in how we achieve something, as in what we achieve. of course, many others have also been involved in making gedp 9 a success this year, and i should also like to acknowledge them publicly. in particular, the sponsoring employers, faculty members, and business leaders, who have so graciously given their time, have all contributed enormously to this programme. i would like in particular to thank, as always, the faculty of the darden graduate school of business administration at the university of virginia, the members of the gedp 9 steering committee, and khalil nooruddin of the bibf and all his staff. let me finish by wishing this programme continued long - term success. our economy needs an educated workforce in order to develop, and in turn the current high growth and continued expansion of our economy translates into a strong need for