on the government ’ s expenditure plans, it has maintained expenditure on key priority areas of education, health, law and order, and infrastructure. the government ’ s focus on free education and primary health care are commendable as it strive to address the poor social indicators in the country. redirecting the focus of government resources to agriculture, tourism and small to medium enterprises ( smes ) will broaden the economic base of the country, reduce reliance on imported food and create employment opportunities for the majority of the population. serious investment in these sectors will assist in reducing the economy ’ s dependence on the mineral sector and increasing its resilience to adverse shocks, such as falling mineral prices or unexpected adverse weather conditions. let me turn to the area of financial system development. the central bank undertook two major financial sector reforms. the first was in 2000 as part of the structural reforms undertaken by the png government to address serious shortcomings in the financial system. this was followed by reforms towards the end of 2000 to broaden the financial sector, increase competition and improve accessibility to financial services, and to create a sound and stable financial system. the reforms in 2000 involved the following : banking sector – strengthening governance of banks with prudent management standards and guidelines superannuation funds – introduce voluntary superannuation and increase wider participation by the workforce ( reduce employees to 10 from 15 ) life insurance – introduced good governance and management practice standards and guidelines savings and loan societies – enhance market - oriented institutions and improved management ( reduced from 100 to 21 ) major legislations enacted were : a. central banking act 2000 making the central bank independent ; b. banks and financial act 2000, superannuation act, life and insurance act c. life insurance act 2000 bis central bankers ’ speeches d. superannuation ( general provisions ) act 2000 there were other financial sector reforms : • exchange control liberalisation for ease of doing business with exchange contracts broaden to allow residents to remit more abroad ( 1992 ), restrictions on ( kina ) lending to non - resident companies from domestic banks liberalised in 2004, current account transactions liberalised in 2005 and capital account transactions in 2007. there are now only a few controls in place. • financial inclusion towards the end of 2000s, there were further reforms striving towards financial inclusion and interconnectivity. these included : o establishment of centre of excellence for financial inclusion ( cefi ) to promote growth of microfinance o reach out to the large non -

time of independence and poverty has come down substantially. of course, some countries like south korea that were in a similar situation then are far better off today but many others have done far worse. indeed, one of the advantages of a vibrant democracy is that it gives people an eject button which prevents governance from getting too bad. democracy has probably ensured more stable and equitable economic growth than an authoritarian regime might have. yet a dispassionate view of both our democracy and our economy would suggest some concerns. even as our democracy and our economy have become more vibrant, an important issue in the recent election was whether we had substituted the crony socialism of the past with crony capitalism, where the rich and the influential are alleged to have received land, natural resources and spectrum in return for payoffs to venal politicians. by killing transparency and competition, crony capitalism is harmful to free enterprise, opportunity, and economic growth. and by substituting special interests for the public interest, it is harmful to democratic expression. if there is some truth to these perceptions of crony capitalism, a natural question is why people tolerate it. why do they vote for the venal politician who perpetuates it? bis central bankers ’ speeches a hypothesis on the persistence of crony capitalism one widely held hypothesis is that our country suffers from want of a “ few good men ” in politics. this view is unfair to the many upstanding people in politics. but even assuming it is true, every so often we see the emergence of a group, usually upper middle class professionals, who want to clean up politics. but when these “ good ” people stand for election, they tend to lose their deposits. does the electorate really not want squeaky clean government? apart from the conceit that high morals lie only with the upper middle class, the error in this hypothesis may be in believing that problems stem from individual ethics rather than the system we have. in a speech i made before the bombay chamber of commerce in 2008, i argued that the tolerance for the venal politician is because he is the crutch that helps the poor and underprivileged navigate a system that gives them so little access. 1 this may be why he survives. let me explain. our provision of public goods is unfortunately biased against access by the poor. in a number of states, ration shops do not supply what is due, even if one has a ration card – and too many amongst the poor