. enhanced infrastructural development, the implementation of education and skills development programmes which deliver the skills necessary for a modern economy, and careful land and agriculture reform, greater infusion of technology in the economy, and labour market reforms are some of the most important prerequisites for boosting economic performance and employment creation. the macroeconomic policy setting is appropriate. going forward, structural reforms will be key to unlocking the economic growth and development potential of south africa. the authorities are on the correct path. all of these reforms need to be nurtured carefully as it takes a while before they bear fruit. however, it is crucial that they be supported throughout by a stable and transparent macroeconomic policy framework. as always, the senior staff of the bank present at your tables will be available if required to clarify any of the remarks i have made during this evening. meanwhile, a hearty welcome once again and thank you for accepting our invitation to this annual dinner in honour of ambassadors and high commissioners accredited to the republic of south africa. your attendance is much appreciated. thank you.

at the meeting of finance ministers and governors in october at the grand epoch city, xianghe, hebei province, china. in august i mentioned in my address to shareholders of the bank that closer economic co - operation in the sadc region and the african continent will increasingly become a key strategic focus area in the years ahead. the bank has for example during the course of the year once again rendered technical assistance to various other central banks in the region. the pursuit of price stability will nevertheless remain the primary objective of the bank. the consolidation of inflation at lower levels and with lower variability is by far the most important contribution the bank can make to the economic development of south africa and by implication that of the subcontinent. of particular importance therefore from a monetary policy perspective is that cpix - inflation remains within the target range of 3 to 6 per cent. considerable success has been achieved in pursuit of major policy objectives and the south african reserve bank remains committed to ensuring that the hardwon gains in the fight against inflation are not forfeited. inflation has extended its stay within the 3 - to6 - per - cent target range to 26 months – more recently amid a strongly growing domestic economy and robust domestic demand. the inflation outlook has deteriorated moderately over the past few months, mainly as a result of developments in international crude oil prices. although domestic demand and output remain buoyant and point to some additional upward pressure on inflation, there is still little evidence of demand pressures or second - round effects of oil price increases impacting on inflation. oil prices, domestic demand and output developments nevertheless pose significant risks to the inflation outlook and monetary policy will have to remain vigilant. finally, you would have noticed during the course of the year that increasing prominence is being given by government to investigating all the feasible ways of achieving stronger economic growth. whereas growth in real gross domestic product amounted to 3, 7 per cent in 2004, the october medium term budget policy statement provided for real growth of 4, 4 per cent in 2005 and approximately the same rate of growth in 2006. despite some progress made in recent years, continued high levels of unemployment necessitate even more ambitious steps to strengthen south africa ’ s growth potential in order to achieve sustainable higher economic growth. the south african reserve bank is committed to doing its part by containing inflation, thereby providing a launching pad for enhanced growth, development and employment creation. but as i have mentioned on various occasions during the course of this year, this is not a sufficient condition for stronger growth