rasheed mohammed al - maraj : luxembourg – a global financial services centre keynote address by he rasheed mohammed al - maraj, governor of the central bank of bahrain, at a seminar “ luxembourg – a global financial services centre ”, manama, 11 january 2010. * * * your excellencies, ladies and gentlemen : on behalf of the central bank of bahrain, it gives me great pleasure to welcome you to bahrain and to have this opportunity to discuss matters of common interest between luxembourg and bahrain. as i am sure you know, the economies of bahrain and luxembourg have many similarities. in both cases we act as a financial services hub for a wider economic region. in bahrain ’ s case, this region is the middle east and north africa, including the six member states of the gulf cooperation council. in consequence, like luxembourg, the combined assets of our financial industry represents several multiples of the size of our economy. traditionally, bahrain has concentrated on developing our banking industry, including the wholesale banks that provide project finance throughout the wider mena region. however, in recent years, in line with the vision 2030 plan, bahrain has sought to diversify its financial sector. we have seen a growing presence of insurance companies and fund managers. as of november 2009, there were 2, 610 authorised funds established in bahrain managing assets of over nine billion us dollars. while i realize that this is small in comparison with the size of luxembourg ’ s fund management industry, this is part of the financial sector that we are seeking to develop further and we expect it to grow rapidly in the coming years. the financial crisis has caused many financial centres to review their development strategies. bahrain is no exception to this trend, even though the crisis has had only a modest impact on our financial system. throughout the difficult period of 2008 and 2009, our financial markets continued to function normally and the government of bahrain did not consider it necessary to take some of the extraordinary measures, such as recapitalization of banks and providing blanket guarantees, that had been adopted in other parts of the world. although we needed to place two wholesale banks into administration in the course of 2009, these events did not have a spill - over effect to the wider financial system. in fact, the financial markets seem to have taken comfort from the prompt and effective action taken by the cbb in dealing with these two problem banks. in bahrain, as in the rest of the world, the impact of the financial crisis was felt first through a withdrawal

and indeed they have made friends for life here. financial institutions also came on board to assist in the recovery efforts through the special member withdrawals from the fiji national provident fund and special loan arrangements and payment holidays offered by banks and other financial institutions. the reserve bank also contributed through its natural disaster and micro, small and medium enterprises ( msme ) funding facilities. these measures are expected to benefit growth this year through higher consumption and investment by businesses and government, although a pick - up in imports associated with the higher domestic demand is likely to dent our foreign reserves a little. our official reserves are currently around $ 2. 0 billion, enough to pay for 5. 6 months of retained imports, a level which is considered comfortable. while inflation spiked in april to 3. 8 percent on the back of price hikes in agricultural market items following the cyclones, this effect will be temporary, as we expect inflation to remain subdued in the near term due to the low world commodity prices. end of year forecasts for both these key macro - indicators ( for which the reserve bank is responsible ) remain favorable at this time. the medium term outlook for the fiji economy is also expected to remain positive, notwithstanding any further adverse shocks, with higher growth forecasts of 3. 6 percent and 3. 2 percent for 2017 and 2018, respectively. the major impetus for future growth is expected to result from ongoing rebuilding efforts ( similar, but on a smaller scale to what new zealand has experienced with the christchurch rebuild ), as well as the faster pace of government capital spending and strong tourist numbers and remittance inflows. ladies and gentlemen, government has in recent years been targeting its capital share of total spending at around 40 percent, which is a notable increase from just 28 percent in 2013 and bis central bankers ’ speeches well above the levels of a decade ago. the benefits of this higher capital spending are now clearly seen in our improved roads and other infrastructure. tourism receipts and inward remittances, our number one and number two foreign exchange earners at $ 1. 5 billion and $ 492 million respectively in 2015 ( both new records ) are expected to continue their positive growth trajectory. as i alluded to in my opening, the tourism sector is, and has been, key to our overall economic performance for many years now and i thought i should say a little more about the industry. it makes up around 34 percent of gdp and contributes significantly to employment. in 2015 visitor arrivals totaled a record 754