to help us stop and prosecute the operators of these schemes. the recent snide remarks from the media and the public do not augur for the efforts of all concerned persons to stamp out this form of robbery from the public. 4. acknowledgements may i take this opportunity to thank the business houses and community in kimbe and the west new britain province for your support in participating in the business and employment s urveys conducted by the bank. your continued support in providing us with up - to - date information will enhance the accuracy and quality of our reports and forecasting for the formulation of monetary policy. the input together with that from other sources is compiled into the quarterly economic bulletin and other bank publications that are sought from within png and abroad. the surveys are useful in enabling the central bank to keep abreast of developments in the real economy. the result of the surveys enables us at the central bank to design monetary policy, and importantly, provides another source of information for the government to compile its estimate of gross domestic product ( gdp ). whilst we can obtain information from headquarters, there is spec ial input from actually going out into the regional centres and obtaining ‘ on the spot ’ information. at present, a total of 496 companies are included in the survey sample covering six regions and eight industries. of these, 14 companies that are headquartered in kimbe and bialla participate in our survey, while others are covered by their head offices in port moresby, lae or kokopo. i look forward to your continued cooperation in providing the required information in the surveys. let me at this point indicate some of the west new britain province ’ s contribution to the country ’ s balance of payments performance. based on various commodity reports, over the three years between 2000 and 2003, west new britain province exported on average 61 percent of png ’ s palm oil volumes or earned 59 percent of palm oil export revenue, an average of 23 percent of png ’ s volumes of logs or 22 percent of export revenue from logs, and on average 1. 5 percent of total cocoa volumes or 1. 5 percent of cocoa export revenue. it is important that producers and exporters continue to make use of this ‘ window of opportunity ’, with better commodity prices and stable economic conditions. this will ensure sustainability of the current improved macroeconomic environment. the board and staff are looking forward to the visit to the palm oil factory tomorrow to obtain first hand information on its operations. the central

20 september 2004. • balance of payments ( bop ) : the improved inflows of export receipts reflect higher prices and volumes by the non - mineral sector, which is an encouraging sign that growers and exporters are responding positively to the improvements in commodity prices. the central bank has also increased its gross foreign exchange reserves to a historical level of k1, 992 ( us $ 623 ) million on 31 august 2004, sufficient for total and nonmineral import covers of 5. 6 and 7. 5 months, respectively. • fiscal operations : the national government ’ s commitment to the 2004 budgetary framework resulted in it achieving a budget surplus of k219. 6 million in the seven months to july 2004. this improvement was due to higher tax and dividend receipts, and lower interest cost on domestic debt. the prudent fiscal management resulted in a net retirement of k72. 6 million in treasury bills, the front loading of counter part funding for development projects, and allowed the restructuring of domestic debt from short to long term. • domestic interest rates : consistent with the easing stance of monetary policy since the second half of 2003, interest rates continued to trend downwards. the 28 days treasury bill rate declined from 7. 00 percent at the end of june 2004 to 4. 50 percent this week, while the commercial banks indicator lending rates ( ilr s ) have also trended downwards to reach a range of between 11. 75 and 12. 75 percent by the 1st of october 2004. with the annual inflation rate at 1. 9 percent, the returns on treasury bills are still positive and portfolio investors are encouraged to retain funds onshore rather than take unnecessary exchange rate risks by investing offshore. • lending : lending by the commercial banks continued to decline, in spite of the high liquidity levels in the banking system and the low interest rate environment. the central bank has encouraged the commercial banks to pass on the benefits of the low interest rates to their customers. in addition, the bank removed the restrictions on kina lending by licensed financial institutions to non - resident companies as part of the review on foreign exchange control regulations and to encourage lending by the banks. i am encouraged by recent comments that there are very viable projects commercial banks are now viewing. given the high level of liquidity in the banking system and to smoothen the sharp decline in interest rates, the tap facility was closed in may 2004 and the maturing volumes were shifted to the weekly auction. in addition, the minimum amount