group peer learning program on financial inclusion. the united nations now has her majesty queen maxima of the netherlands as their special advocate for inclusive finance for development and she is also honorary patron for the g20 global partnerships for financial inclusion. the alliance for financial inclusion held its latest annual global policy forum in malaysia in september. major regional and donor organisations such as the oecd, cgap, adb, ausaid and giz have been organising workshops and bis central bankers ’ speeches discussions on financial inclusion and there have been inter - regional country meetings such as those in africa and in asia. at the highest global levels, there is the clear recognition that deliberate financial inclusion measures and initiatives are essential if we are to reach the 2. 5 billion people who do not have access to any form of financial services and products and who remain in poverty. regional coverage in our own pacific region, we have come to also recognise the importance of embracing financial inclusion. in 2005, the united nations development programme estimated that around 6. 5 million pacific islanders and 80 percent of low income people1 did not have access to formal financial services, making it one of the most neglected regions in the world in terms of banking services. i am glad that the microfinance pasifika network took on the advocacy role in the pacific. in its vision statement, it says that “ … the network shall be committed to improving quality of life through the provision of inclusive and sustainable micro financial services, such as savings, credit, remittances and payment services and insurance, to the economically disadvantaged... ” however, i am also glad to say that our own central banks and authorities together with other committed stakeholders, have also taken on the baton theme of forum – importance of access and impact ladies and gentlemen, our theme, “ microfinance in the pacific – increasing access, enhancing impact ”, brings a number of questions to mind. how do we reach the unbanked or those that do not have access to microfinance or any form of financial service and how do we make a difference to their lives? technological innovation such questions require the capacity to think outside the box. the problems and the difficulties are such that one cannot approach and derive a solvable position in many cases unless one takes a non traditional and non conventional approach to problem solving. this calls for innovative thinking. our problems in the pacific are fairly similar. we are small island countries that are dispersed over a wide area of sea. our economic growth rates

• honourable members, you may be surprised to know that almost 2. 0 percentage points of the 5. 5 percent inflation outcome at july end was driven by higher kava prices. even though kava constitutes only 2. 5 percent of our consumer price index ( cpi ) basket, it contributed substantially to the inflation out - turn. as a result, while yaqona farmers benefitted from the high prices, kava consumers had to fork out significantly more for their favourite brown label drink as prices almost doubled by july and rose three - fold by january this year. • for those of us who don ’ t drink kava, our inflation was effectively around 3 percent. external stability • as a small open economy dependent on imports of a variety of goods such as medicine, food, fuel, machinery, etc. we need to maintain a sufficient level of foreign reserves otherwise there will be pressures on our exchange rate. • the international monetary fund has set a benchmark on the level of foreign reserves which states that it should be sufficient to cover 3 months of import. • for fiji, we like to build in an additional buffer above this benchmark as we are prone to natural disasters, which can affect our export sector including tourism as well as external shocks which can significantly increase our import bill, and in turn significantly impact our foreign reserves. • honourable members, i am pleased to inform that in regards to external stability, fiji ’ s foreign reserves remained well above the benchmark throughout the review period. • at the end of july 2016, our foreign reserves were $ 1, 982 million, just $ 18 million shy of the $ 2 billion mark and was sufficient to cover 5. 5 months of retained imports. • these foreign reserves are what the rbf holds in its accounts. in addition, we have allowed a number of non - bank financial institutions to invest offshore. at the end of july 2016, foreign reserves held by other institutions amounted to more than $ 500 million. financial stability • honourable members, it is paramount that our financial system is safe and sound whereby depositors, pensioners, policyholders and unit holders ’ funds are protected. the safety and soundness of our financial system is also crucial in ensuring the confidence of investors and international agencies. • in this regard, i am pleased to inform the committee that the fijian financial system remains safe and sound supported by a growing asset portfolio which rose marginally from the end of 2015 to july 2016 to just over $ 16 billion. this is almost