l wilson kamit : brief review of economic developments in papua new guinea speech by mr l wilson kamit, cbe, governor and chairman of the board of the bank of papua new guinea, on the occasion of the payment of the 2006 bank of papua new guinea dividend to the government, port moresby, 9 august 2007. * * * introduction the minister for treasury, right honourable sir rabbie l. namaliu, csm, kcmg, mp, members of the board, executives of the bank of papua new guinea, ladies and gentlemen. the central banking act ( cba ) 2000 specifies the objectives and functions of the bank of papua new guinea. our core functions are that of formulating and implementing monetary policy, supervising the financial system, ensuring an efficient payments system, and promoting macroeconomic stability and economic growth in papua new guinea, the central bank also has a special relationship with its shareholder, the government. in our thirty one years of independence we have had, fourteen years of stable low growth up to 1989, ten years of very difficult times up to 1999, following the bougainville crisis. this lost decade was characterized by gross mismanagement of the economy that resulted in an almost default on our foreign currency liabilities in 1994, which forced us to float the kina our national currency, an almost second default in 1998 to 1999, the combined effect of a very severe drought, the asian financial crisis and the world economic slowdown exacerbated by continued gross mismanagement of the economy. we were very fortunate that in mid 1999, a new government was formed, that undertook some major reforms. like minded leaders, especially our ministers, continued with this reform process and we look forward to working with the new government on the reform agenda. it took four years to stabilize the economy, re - establish the confidence of the public, and realising that the constitutional changes introduced to the political system through the integrity of political parties act, will result in political stability. we are experiencing for the first time a government which lasted a full term of five years. these developments assisted by very high commodity prices of oil, copper and some of the agricultural exports like rubber, resulted in a very stable macro - economic environment, of fiscal surpluses, low inflation, low interest rates, an appreciating exchange rate and fast accumulation of foreign exchange reserve. i am not going to the statistics but just as an indication, our foreign currency reserves increased have increased from around us $ 300

up measures and achieving remarkable results. first, we have thoroughly removed foreign ownership caps in the banking, securities, futures, fund management and life insurance sectors. foreign - funded financial institutions have been actively expanding their networks in china. since 2018, china ’ s market has witnessed the joining of eight foreign - holding securities companies, two foreign - holding fund management 1 / 3 bis central bankers'speeches firms, 20 private securities investment fund managers, as well as international rating agencies including standard & poor ’ s and fitch ratings. second, we have made continued efforts to expand business scopes of foreign financial institutions. to name but a few, we lifted restrictions on business scopes of foreign securities companies to ensure they enjoy the same treatment as domestic institutions. we permitted foreign - funded banks to become the lead underwriters for debt investment instruments after market - based evaluation. we also permitted foreign bank branches and subsidiaries to get qualified for fund custody. third, we have constantly improved the two - way opening - up of the capital market. in the first nine months of this year, china ’ s interbank bond market witnessed a rmb719. 1 billion increase of bonds held by foreign investors. recently, ftse russell announced that it will incorporate china ’ s government bond into its world government bond index. it should be noted that the opening - up of the financial sector is mutually beneficial. the competitive nature of the financial sector determines that opening - up and competition promotes china ’ s financial sector development and efficiency. meanwhile, foreign investors joining the chinese market can more easily share the benefits of economic development and the reform and opening up of china. hence, a win - win situation. 3. continued efforts to promote opening - up of the financial sector and create a financial business environment that is market - oriented, law - based and international first, we will fully roll out the pre - establishment national treatment and negative list regime, which will transform the philosophies and modes of opening - up. despite the rapid opening - up of china ’ s financial sector, we have noticed in our communications with foreign financial institutions and central banks that foreign - funded institutions are still subject to many permit applications and complex formalities in practice even though restrictions on market access and business activities have been lifted. they still appeal for a more open financial sector. this indicates that the financial sector still has a lot to do in shifting to the negative list management. there is no contradiction between the negative list management and the licensed - operation requirements of