the past because things cannot keep getting much, much worse forever. but for things to show the first sustainable signs of improvement, consumers must start consuming, investors must start investing, and banks must start lending. none of these conditions apply at this point in time at the global level. until these three things happen, nothing much will change in the underlying economic conditions. the best forecast as of now : it won ’ t happen for the next four quarters at the earliest. a few knowledgeable observers called the bottom of the market months ago. others have seen the green shoots of recovery. let us by all means look at the bright side of things but let ’ s not hallucinate. the recovery is not for tomorrow, and this in spite of the best efforts of the g - 20. we ’ ll probably see the first signs of a recovery same time next year. we will have to survive until then and make sure that economic conditions in terms of employment, social stability, financing our yawning balance of payments deficit, reserve level, indebtedness etc. do not become worse pending the recovery. and we must not in the meantime take wrong policy measures in response to short - term pressures. whatever policy measures we take right now should be temporary, reversible, flexible and affordable ; and there be must a clear exit strategy especially if we are moving away from market - determined measures. * no need for redefining or revisiting the economic model then? we have been revisiting our economic model constantly. for example, when the cotonou convention with the eu did away with the sugar protocol, we carried out some reengineering of the industry, and it is still going on – the sugar sector reform package is part of it. when the multi - fibre agreement was dismantled, we had to go and fight for ourselves on open markets with no quota protection. when agoa provided us with a small, temporary respite, we knew it was not to last forever. there is thus some reengineering going on constantly ; “ alterations - as - usual - during - business ” – should be put up on the door of mauritius inc. we keep altering things and we have to continue doing that. the global crisis has thrown up a new set of challenges for us ; for us the good thing about it is that many of them are temporary challenges. but no crisis leads to a situation where, at the end of it, it ’ s back to

can all sleep in peace knowing that the bank is on the job. on a recent occasion, i expressed my satisfaction at the profitability of our banks and the buoyant economic environment generally. i also expressed my concern about the excessive growth of credit which we were witnessing. i had at the back of my mind the truism that bad loans are made in good times. i was determined to ensure that we do not rediscover this through bitter experience. i am happy to report that the situation is firmly under control. so much so that we are actually envisaging repo operations, for the first time in more than a year, to inject liquidity in the system. the determination of the central bank to press ahead, in spite of criticism, has paid off. if we are happy with the profitability of our banks, we remain concerned about their efficiency and the affordability of their services. for instance, the average return on assets ( roa ) of banks in mauritius last year was 1. 8 per cent, 2 as compared to an roa of 1. 3 per cent in our neighbourhood giant, south africa. while strong earnings are important and the higher roa could point to greater operational efficiency, it could also reflect higher costs being levied on the customer. no doubt more competition leads to better price discovery. we have 19 banks operating in mauritius. although, there is a high degree of market concentration, we do not believe that there is any active collusion among them. to stimulate greater competition and enable customers to make informed choices, we are working with banks to devise a common template for displaying applicable fees, charges and commissions in a comparable manner on their respective web sites. a better - informed customer is the best guarantee of greater efficiency in financial intermediation and the sustainable profitability of our banks. it is a fact of life that some banking transactions will go sour, lead to recrimination, and result in costly and protracted lawsuits. if we are keen to reduce transaction costs, and the cost of doing business generally in mauritius, we must address these issues in a more efficient and timely manner. the provision relating to the ombudsperson for banks in the banking act of 2004 still remains to be implemented. you may reasonably ask why. and we owe an explanation on this score. it is my firm conviction that our jurisdiction is too small to have a multiplicity of source : annual report 2007 : bank supervision department, reserve bank of