’ s fiji operations from that impressive global record, let me say something about their fiji operations. it started in 1956 with the newly formed statutory corporation taking over new india ’ s life insurance portfolio. so they have been in fiji for over 50 years. i congratulate them on this milestone. statistics show that lici fiji : • services about 50, 000 policies ; • has total premium income of f $ 21. 85 million in 2005 ; • settled claims totaling f $ 15. 8 million in 2005 ; • distributed f $ 5. 8 million as bonuses to policy holders in 2005 ; and • has a total asset of f $ 164. 75 million as at 31 december 2005. as you can see, lici has contributed significantly to the growth of the insurance industry in fiji and to the development of the country. insurance as you know is an important aspect of personal and corporate life. i am glad to say that lici is at the forefront of the industry and i hope will continue to play this lead role in the future. insurance industry in fiji as the regulator of the insurance industry in fiji, the reserve bank is satisfied with the overall performance of the industry. insurance companies are well capitalised and adequately meet their solvency requirements. as you would expect of the long term nature of business, the bulk of their assets is invested in government securities and term deposits with commercial banks. but the insurance industry faces several challenges. the first is the impact of the economic climate that the country is currently facing. as the economic decline reduces real incomes, policyholders may default on premiums and even surrender their policies. this comes at a time when the risks to businesses may be growing. i am informed that insurance companies including lici have introduced measures to address this challenge. i wish them well in this regard. the second challenge comes from abroad in the form of natural and man made disasters. the world insurance market is still reeling from the impact of the devastation of nine eleven, the hurricane in new orleans and tsunami in asia. in addition, the increase in terrorism activities poses a huge challenge for the insurance industry. the recent bombings in london and scotland are a worry. as a result, the hardening of world premiums is bound to affect the domestic insurance markets. the third challenge is the introduction of new international financial reporting standards. as a result of these new standards, we have seen a fall in asset values of insurance companies, which has reduced their solvency surplus in 2006. those affected by this development

total economic program. this holistic approach is extremely critical to ensure that all policies are pulling in the same consistent direction all the time. it will also bring transparency, certainty and predictability to economic policies. • secondly, we have to adopt a medium term view rather than a short term one. we all know that economic statistics come at a lag and they do fluctuate from month to month. in my view, we will secure more dividends if we develop a medium term policy approach. • thirdly, we need to protect our financial stability at all times. and we have done that in terms of domestic and external. government budget is stable and foreign reserves are holding. sustainability is the key. we should resist the temptation to go for short - term gains, which may create more serious problems for us in the future. building a good economic platform takes time. but it will help us in the long term. • finally, let us take action where we are clear of what we should do. often, we know what we need to do. even overseas analysts tell us what we already know. but unfortunately, we take our time getting those things done. i believe that we are now in a situation that we must act. we need to do all we can to build confidence, remove barriers to investment, raise exports, execute reforms, resolve the land tenure issue and so forth. we are currently projecting an economic turn around in 2008. we should be able to achieve this. moreover, we should aim to exceed the 2 percent growth estimated for 2008 and we can easily do what we need to do now. on monetary policy, as i said, foreign reserves have stabilized. this implies that our policies are working to slow down consumption. but it can also be the result of the economic downturn and the delay in major investment projects which have sizeable import contents. exports are still not performing. so we are still concerned about the medium term. in such a time like this we have to be pragmatic about what we can do. our credit ceiling will be in place for some time. we have allowed liquidity to rise which has led to commercial banks reducing their lending rates. and we have announced that only applications for advance payments for imports more than f $ 15, 000 will require bank approval. the bank believes that this policy measure will facilitate trade payments and assist importers meet their overseas commitments. let me add here that the bank is not considering any devaluation of the currency