1968 and became a republic in 1992. a couple of days ago, we celebrated our 40th anniversary as an independent nation. in spite of several handicaps like limited natural resources, remoteness from major markets, a small domestic market and vulnerability to cyclones and man - made external shocks alike, mauritius has achieved one of the highest per capita gdp in africa. in 1968, mauritius was, by all measures, a poor country with per capita income of less than us $ 200. prospects were so gloomy that nobel - prize - winning economist james meade, who headed an economic commission sent by the british colonial administration in the aftermath of one of the most devastating cyclones in the country ’ s recorded history, recommended emigration as a key part of the solution to the island ’ s problems. one of the first world bank missions to visit the country, led by jean baneth, opined “ … this country exudes an air of hopelessness. ” another nobel prize - winner, v. s naipaul, titled an analytical piece on mauritius “ the overcrowded barracoon. ” and a french writer followed suit with a book entitled “ maurice – quelle independence? ” it will take me too long to take you down the road we have travelled over the last four decades. i have been part of the journey, occasionally as an observer, but mostly as a doer, a mover or “ agent provocateur. ” suffice it to say that the prophets of doom and gloom have been proved utterly wrong, that the malthusian nightmare has been exorcised, that mauritius is now the poster boy of the imf and the world bank when it comes to successful economic development in africa. by 2007, for a population of nearly 1. 3 million, per capita gdp has increased to nearly us $ 6, 000. real gdp has grown, on average, by about 5 per cent per annum over the last two decades. for 2008, real gdp growth is estimated at 6 per cent, up from 5. 6 per cent in 2007. this has been one of the most remarkable policy - driven economic transformations in modern history. the bank of mauritius has played a key role in this economic transformation. the modalities of conducting monetary policy in mauritius have evolved from strong reliance on controls and directives to more market - based mechanisms. the 1970 ’ s were turbulent years for the conduct of monetary policy : external price shocks, together with expansionary domestic policies, led to an

away from the key repo rate. this has been particularly evident since last november. this phenomenon has been caused by the excess liquidity on the interbank money market and partly by the sizeable reduction in the primary issues of bills mainly by the government relative to maturing bills. the central bank ’ s absence in the reverse repurchase market reflected our concern not to mop up any “ hot money ” or money just transiting through segment b activities – which i detailed earlier. we attempted to address systemic excess liquidity by introducing a special deposit facility whereby banks were invited to place special deposits with the central bank for a period of 14 days at a rate of 125 basis points below the key repo rate. the “ disconnect ” between the key repo rate and short - term market interest rates is a source of concern to us. the bank is contemplating a widening of the corridor as the ± 50 basis points might be too narrow for a small open economy like ours which is vulnerable to shocks and subject to volatility in international capital markets. we are also currently debating internally whether the corridor should be “ symmetric ” or “ asymmetric. ” moreover, there are issues relating to “ discretionary ” as opposed to “ automatic ” conduct of repurchase operations by the bank which need to be addressed. these technical issues have been taken up with the recent imf article iv mission that visited mauritius during the last two weeks. obviously, we are looking for a solution that fits more comfortably with the mauritian situation, characterized as it is by a highly - concentrated banking structure. let me also make a point about our legal mandate. in terms of the bank of mauritius act 2004, the primary object of the bank is to maintain price stability and to promote orderly and balanced economic development. in this respect, real sector issues are duly weighed up in our monetary policy decision - making process. as part of our other objectives, we must also ensure the stability and soundness of the financial system in mauritius. the process of fiscal adjustment in mauritius has been set in a medium - term framework. corrective measures to address fiscal imbalances and restore fiscal discipline have been initiated. the budget deficit, as a percentage of gdp at market prices, declined from 5. 3 per cent in financial year 2005 - 06 to an estimated 4. 3 per cent in fy 2006 - 07. for the current financial year, it is estimated at 3. 8 per cent. i should perhaps also mention