may recall that tax revenues have already risen by rs. 100 billion or 33 percent in last three years. the projected increase of 21 percent in the next two years is therefore very much in line with the past performance. fourth, as all of you know the large investment in balancing, modernization and replacement in textile industry during last few years will start paying dividends in form of better quality and higher value added exports. the share of value added items in total textile exports has already exceeded 60 percent and it is postulated that this share will be almost 70 percent by 2004 - 05. fifth, monetary and credit policies and banking sector reforms implemented so far will show some results in form of expansion in credit to housing, consumer financing, sme, agriculture sectors. as these sectors have strong backward and forward linkages the multiplier effects of aggregate demand expansion will reinforce growth impulses in the economy and induce supply and production response. sixth, the devolution of powers to local governments to deliver essential services at the grass root level will improve the effectiveness of development spending. as most projects will be driven by the demands of the community rather than imposed unilaterally by central planners, it is expected that waste and leakages will be kept at a minimum level. seventh, one of the major drivers of cost in the economy is electricity tariffs. both the households as well as industrial units are facing unviable power tariffs. with the commissioning of ghazi - brotha project, the thermal - hydel mix will change. as more thermal power is switched to natural gas from furnace oil, losses in transmission and distribution are curtailed and financial charges of ipps are cut down by prepayment of expensive debt power tariffs should come down and benefit the consumers. finally, the standards of governance set by the government in last three years should be sustained and further steps are taken to minimize corruption and leakages in financial transactions. merit remains the basis for recruitment and promotion in public service and nepotism and favoritism are no longer the norms. as you can see from the above that in this scenario we haven ’ t still relied on private sector investment as the engine of growth. public sector investment will go up fro 4. 7 percent of gdp to 6. 2 percent in 2004 - 05 while private sector investment will remain at 9. 4 percent – not much different from the current level of 9. 2 percent. let me conclude by saying that if the existing policies continue, standards of good governance are

rasheed mohammed al maraj : meeting the challenges of growth opening keynote plenary by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the 5th middle east insurance forum “ meeting the challenges of growth ”, manama, 8 february 2009. * * * your excellencies, ladies and gentlemen, good morning. it gives me a great pleasure to welcome you to bahrain for the 5th middle east insurance forum. this event is an opportunity for the insurance industry to meet and exchange views on current market and economic conditions that have a direct impact in our insurance markets. i would like to thank the organisers, sponsors and speakers for supporting this important gathering. this year ’ s theme for the forum – “ growth opportunities beyond the crisis ” – is a reminder that the financial landscape has changed dramatically since the last time this forum was held. the turning point in the global financial crisis is generally agreed to have been the bankruptcy of the investment bank lehman brothers in the middle of september last year. this turned a problem that had been seen as primarily affecting the developed markets into a worldwide phenomenon. previously the slowdown was expected to be limited to the developed markets while the emerging markets continued their recent strong growth. after lehman the slowdown began to affect all parts of the global economy. the crisis has been a stark reminder of how interconnected the world financial system and economy has become. financial sectors have also become more interconnected. while most comment has concentrated on the role that the lehman bankruptcy played in worsening the crisis, we should not forget that the events surrounding aig also had an impact on global financial markets. in other words, aig had become systemically important and had far reaching implications outside the insurance industry. at the central bank of bahrain, we believe that the recent experience of global financial crisis has reinforced that our top priority must remain our duty to ensure the protection of policyholders. we remain truly committed to foster the trust and confidence that insurers provide to their clients, particularly in times of need. from a regulatory perspective, the cbb has taken various steps to ensure that a stable insurance market continues to strive and prosper in our region. we are fortunate in bahrain to have had significant growth in the level of gross premiums over the last several years. in 2007, insurance premiums increased by more than 20 % and the interim reports received for 2008 appear to indicate a similar trend. we remain however vigilant and through ad hoc reporting