##blood of our communities in the highlands and sepik regions, where the impact of improved production and crop development is demonstrated in improved livelihoods in the villages. we see solar panels and water tanks being installed, children enrolled in school, and other positive flow - on economic benefits in those remote communities who already have plans in place for next year's harvest. cash crop exports were much higher as a percentage of gdp immediately postindependence, and volumes have fallen from their peaks. the government is looking at very closely at opening new markets and creating incentives to increase agriculture production. i note that a weaker kina results in greater wealth for our agriculture producers – and i'll return to a discussion on foreign exchange later. inflation peaked at 6. 3 percent in september of 2022 before easing to 2. 2 percent in september 2023. the most recent data available shows inflation edging higher again, to 3. 9 percent in the december quarter of last year. in response to january's unrest, we eased our monetary policy signaling instrument, the kina facility rate, half a percentage point to 2 percent to help provide support to businesses. it was a calculated decision. we knew inflation had increased in the december quarter but it was still relatively low and we decided that it was vitally important that we provide some relief to businesses and households. we had hoped that by lowering the kina facility rate we had enabled the commercial banks to likewise lower their rates and pass this benefit on to the business community. unfortunately, this did not happen. this reinforced our ongoing concern that monetary policy is not being transmitted effectively through the economy. i'll return to this later in the presentation. 2 / 7 bis - central bankers'speeches i know a critical concern for you, as the business community, is the issue of foreign exchange management. there are a number of structural imbalances in png's economy that are affecting our economic growth and our supply of foreign currency. we record trade surpluses each year, with the value of our exports consistently exceeding the value of our imports, and this should be reflected in current account surpluses. while we should be in surplus, the reality is that we have a persistent deficit of foreign currency inflows and as a result have been unable to meet the demand of our domestic market. the reason for this simple. large quantities of our export proceeds are not repatriated to papua new guinea. instead, they are held offshore, leading to the accumulation of

the formal banking system. we understand the role digital transformation will play in our economic growth and financial inclusion but one of the key challenges we face are those of secure identity for our remote citizens. as a png citizen, i know how difficult, costly and time - consuming it can be to secure identity documents and this becomes an insurmountable challenge when you come from a rural village with little access to our formal sector. we worked with the adb and a private company, digizen, to develop the first digital i. d. product made specifically for papua new guinea. 6 / 7 bis - central bankers'speeches through this process we better understood what we, as the regulator, need to consider for the adoption of digital identities for banking. to strengthen our systems and encourage the use of digital ids, the financial analysis and supervision unit, fasu, responsible for overseeing the anti - money laundering and counter terrorism financing act, has issued a guidance document for digital identity that is currently under review by regulated financial institutions. all going well, it should be launched shortly and it will provide direction to our financial institutions on digital identity requirements. we are also working to identify policies and practices that, in the past, would have deterred people from opening and using bank services. these include, but are not limited to, the high cost of transaction fees and account charges. as we identify key barriers, we will implement more initiatives to promote the use of the formal financial system and significantly lower our people's reliance on cash. we also want to introduce more products that help our rural communities. our regulatory sandbox has commenced testing of another new product, pinbox, which will work with insurance and pension providers for all papua new guineans to have the option to save for their retirement through high - quality products from reputable providers – no matter where they are located or what their incomes are. the bank of papua new guinea is taking steps to ensure a modern and inclusive financial system that delivers the best outcomes for our people. we cannot continue to do the same things and expect a different result. we need to adopt policies consistent with a modern, international and growing economy. this may sometimes require bold – and perhaps unpopular – decisions, but we know they are the right ones to build the foundation for the future success of papua new guinea. thank you for inviting me to present today. i look forward to the remainder of this session and the discussion to follow. 7 / 7 bis - central bankers'speeches