jul'03 oct'03 apr'03 jan'03 jul'02 oct'02 apr'02 jan'02 jul'01 oct'01 apr'01 jan'01 jul'00 oct'00 apr'00 jan'00 jul'99 oct'99 apr'99 price stability ( low inflation ) does not mean no increase in domestic prices as is the common perception. there are increases but at a low rate for a continued mo perio nth d of time. 70. 0 80. 0 60. 0 usd & aud 0. 4 0. 3 40. 0 0. 2 20. 0 0. 1 0. 0 0. 0 % 90. 0 0. 5'0'0 110. 0 0. 6 m s'm'9'0'0'0'0'0'0'0'0'0'0'0 s'm s'm s'm s m s m s m s m s'9 130. 0 0. 7 50. 0 twi & reer exclusion - based underlying cpi headline cpi jun - 08 mar - 08 dec - 07 sep - 07 jun - 07 mar - 07 dec - 06 sep - 06 jun - 06 mar - 06 dec - 05 sep - 05 jun - 05 mar - 05 dec - 04 sep - 04 jun - 04 mar - 04 dec - 03 sep - 03 jun - 03 mar - 03 dec - 02 sep - 02 jun - 02 mar - 02 inflation source : bank of png reer twi aud usd dec - 01 sep - 01 jun - 01 mar - 01 dec - 00 sep - 00 jun - 00 mar - 00 dec - 99 m exchange rates 120. 0 100. 0 30. 0 10. 0 - 5 qtr supervision with respect to supervision, our independence allowed us to clean up the financial sector. in 2000, we replaced the board and management of the troubled government - owned png banking corporation. it was revamped and successfully sold off under the government ’ s privatisation programme in 2002. the commercial banks were able to perform well following the reforms. the chart below shows the decline in non performing loans ( npls ) since 1999. non performing loans k'mn the clean up process included closing down 86 dormant savings and loan societies, placed other financial institutions under management, with a view of enabling them to trade themselves back into business, and liquidated a number of financial institutions that have been mismanaged and

bank population o • • introduced financial literacy programmes to develop inclusive financial system improve national payments system to enhance efficiency of payment system o introduction of new payments system, kina automated transfer systems ( kats ) – improve efficiency and safety of transactions ( real time settlement for high value payments, cheque truncation, direct credits ) o reduce incidence of fraudulent transactions anti - money laundering & countering financing of terrorism to reduce criminal use of financial system o establishment of a unit ( fasu ) at the central bank to monitor, investigate and report proceeds of crime to police o passage through parliament to enact relevant acts o o o o criminal code amendment ( money laundering and terrorism financing ) un financial sanctions aml / counter terrorist financing proceeds of crime act these reforms have ensured we have a sound and prudently managed financial system with a world - class payment system. i encourage you all to utilise the financial products and services offered by our financial system with institutions authorised by the central bank when you enter the workforce. in line with the government ’ s vision 2050 objective of wealth creation, the bank is driving the financial inclusion program under the national strategy for financial inclusion & financial literacy 2014 – 2015. a key priority of the strategy is to reach one million unbanked lowincome papua new guineans and micro and small enterprises, with a diverse range of financial services. 50 percent of whom are to be women. the program has been rolled out with the support of the licensed financial institutions to promote the savings culture among the population. these have been facilitated through establishment of the micro finance companies and micro banks. to enhance financial literacy of the population, the central bank carried out the financial education through the financial literacy program. these include visits to selected provinces to conduct the programs, schools programmes for financial products tailored to students, hosting of conferences and workshops through the cefi. there are plans for collaborative work with the department of education by including it in the core curricular for primary and secondary schools. bis central bankers ’ speeches you graduands will be entering the workforce as the country experiences a lot of development. your training at iea port moresby equips you for a working life. equally important though is the need for you to be financially literate in managing the earnings of your labour. you must know how to budget your earnings, how to save and also how to invest. for what is the point of going to work everyday, earn an allowance or salary but struggle to get by