range of 2. 9 - 3. 2 % in the first 11 months of 2007 while inflationary pressure apparently intensified in the second half of 2007 and reached 5. 57 % for the whole year. 3. with an area of 28. 5 sq. km. and a population of about 530, 000, the burgeoning economy no doubt has put human resources and infrastructure under great strain. to maintain a sustainable growth, we have to overcome the bottleneck and diversify. to enhance the capacity of our development, the macao sar government has embarked on a number of infrastructural projects. internally, a light rail mass transit system will link up all essential spots in a few years. externally, the airport will be expanded while the hong kongzhuhai - macao bridge is on the drawboard. we have applied a number of incentive schemes to encourage our youths to acquire more knowledge so as to make preparation for a transformation to a knowledge - based economy. the most significant measure is the provision of 15 year free education to our kids. we are fully aware of our strong connections with mainland china and portuguese speaking countries and also our competitive edge in terms of comparatively low cost, quick and free flow of information, flexible business structure and low tax regime. we have fully exploited all these. thus macao has been able to benefit from the closer economic partnership agreement with the mainland and play a key role in platforms servicing portuguese speaking countries ; important economic bases of mainland china, particularly guangdong west ; and ethnic chinese merchants all over the world. we also realize that our tourism services industry needs non - gaming elements. ladies and gentlemen, you may take a break to tour around macao to appreciate macao as a metropolis which provides culture, entertainment, recreation, as well as convention and exhibition facilities to tourists and business visitors. 4. when we talk about diversification, we put the financial sector in our agenda as it accounts for about 10 % of our gdp. it is a high value - added, profitable and capital intensive industry which is most suited to an economic ecology like macao. the monetary authority of macao is the sole regulator of the financial sector, which is dominated by banks and insurance companies. at the moment, there are 28 banks operating in macao of which 3 are operating under offshore regime. in addition, there is a finance company with restricted banking activities and a non - bank credit institution which specializes in the issuance and management of electronic money stored value card service.

however, on a request to review this approach, an informal group was set up in rbi and the report has been circulated as a discussion paper on the rbi website. after studying the international experience, the group recommended that banks may classify their entire investments into three categories, viz., held for trading, available for sale and permanent. the permanent category should not exceed 25 % of total investment. the group recommended that securities classified as held for trading should be marked to market monthly, if not more frequently. securities in available for sale was recommended for marking to market at the year end or at more frequent intervals as decided by the board of directors. securities held in permanent category can be carried at cost or market value whichever is lower. if you do find it worthwhile to vent your views, perhaps in consultation with bankers present here, please do so and come back to us soon. active consolidation of government debt as mentioned earlier, we made a beginning during the current year with regard to consolidation of government debt. consolidation has improved the liquidity in the market with consequent reduction in the liquidity premium. encouraged by the results, we would now like to embark on an active programme of consolidation consistent with the market borrowing programme of government. currently, there are about 98 outstanding loans with residual maturity of up to ten years, covering 78 % of outstanding value. there are 20 loans with maturity over 10 years covering the remaining 22 %. over the last few years, the investor profile in these loans has changed, partly reflecting the valuation norms introduced by the rbi. a number of banks have resorted to substitution of old loans for new marketable loans. keeping all these developments in view, some options can be explored. wherever there are a large number of fragmented issues in any year, these could be consolidated through recall of some loans against reissue of others. another option is to convert loans maturing, say in the next few years into certain actively traded securities coinciding with the same maturity or with elongated maturity. even if this does not result in reduction in the number of outstanding loans, the objective of improved liquidity in a few benchmark securities will be achieved. pds may like to examine these issues in greater detail. operationalising liquidity adjustment facility the committee on banking sector reforms ( narasimham committee ii ) had suggested that the rbi ’ s support to market should be through a liquidity adjustment facility ( laf ). under this facility, the management of liquidity by the rbi will have