##ance sector, the bank does not at all compromise its primary roles and responsibilities. all licensed financial institutions, including microbanks and licensed microfinancial institutions are expected to fully comply with the regulatory and prudential requirements of the bank. protection of public deposits and stability of the financial system are at the centre of the bank ’ s objectives. for these reasons, we continue to enforce good governance in both the board and management level, through the “ fit & proper ” tests for those involved. the bank will not go easy on licensed institutions that are found to be violating the provisions of the various acts that empower it or the prudential standards and directives of the bank. challenge : translating rhetoric into reality we can make speeches, write policies and attend conferences to address the needs of the informal and semi - formal sectors but if these are not translated into reality, those that are supposed to be helped will continue to remain in their backwardness. this is a challenge, not only for the government but, for all stakeholders to consider. the png - adb microfinance project is spear - heading the microfinance development in png. i welcome and encourage the pacific participants to interact with your png counterparts to learn and get as much information as possible from this conference to help you develop your microfinance sectors. acknowledgement i would like to acknowledge the contributions of our development partners through the project. one of the components of the project is the microfinance competence centre ( mcc ). i would like to thank the team members of mcc for organizing this conference and inviting participants from the pacific region to attend. closing in closing, i believe this conference opens up the way for all to share information and ideas to address the common problem of poverty alleviation and rural development through microfinance. in this respect, i wish you all success in your deliberations over the two ( 2 ) days of the conference. thank you very much.

provides an opportunity for the government to improve the public utilities and introduce microeconomic reforms to remove impediments to trade and investment and efficiency in the delivery of public services. these reforms are necessary to promote economic growth. the level of gross foreign exchange reserves as at 9 june 2006 was k2, 990 million ( us $ 989 million ), a record high in our history, sufficient for 7. 0 months of total and 11. 0 months of non - mineral import cover. the high level of reserves has further strengthened the central bank ’ s position to smooth any undesirable volatility in the foreign exchange market. under the floating exchange rate regime adopted in 1994, the kina exchange rate is determined by the supply and demand for foreign exchange. consistent with the objective of price stability, the bank enters the foreign exchange market from time to time to smooth the effects of short - term volatility. in 2006, the exchange rate is expected to remain stable given the favourable international prices for mineral and non - mineral export commodities. non - mineral exports are expected to increase in 2006, due to the supply response to higher prices. producers and exporters are continuously encouraged to increase production for export to take full advantage of the current high international prices. in addition, developments in the mineral sector, particularly the progress on the png gas project and the finalisation of the ramu nickel project should contribute positively to investor confidence. lending to the private sector continued to grow strongly. the growth in lending has been broad based covering the agriculture, forestry and fisheries, manufacturing, transport and communication, building and construction and other businesses including hotels and restaurants, personal loans and advances for housing sectors. firms have responded positively to the low interest rates and lending has reached unprecedented levels. we recently announced the withdrawal of the 1 and 2 toea coins from circulation. i urge the public to return the 1 and 2 toea coins as they will officially cease to be legal tender on the 19th april 2007. i also encourage the business houses to make changes necessary for a smooth transition. in this regard, i encourage firms to be fair and responsible in adjusting prices to the on - off policy change. the government ’ s budget deficit in the march quarter 2006 was 0. 3 percent of nominal gross domestic product. however, substantial mineral tax receipts, which were higher than expected at the end of april 2006, suggest that government revenue is likely to be significantly greater that budgeted in 2006. while acknowledging the positive outlook of