such as electronic banking and payment of some utility charges have taken advantage of the impressive take - up by the population of the mobile telephone services. papua new guinea is benefiting from high commodity prices for its major exports and from inflows of capital investments related to the png lng project. as a result, the country ’ s balance of payments has shown an overall surplus of k526 million up to june 2010, and the level of gross foreign exchange reserves at the end of june 2010 was us $ 2, 580. 5 million, sufficient for 10. 9 months of total import cover. inflation however remains a concern due to increased domestic demand. the annual headline inflation was 6. 2 percent in june 2010 and is expected to be around 7. 0 percent by end of 2010. price pressures are expected to come from domestic demand related to the png lng project and government spending. in coherence, the central bank continued to take a cautious approach to monetary policy. the country ’ s stable macro economic conditions coupled with the slow pace of economic recovery in the global economy has enabled the central bank to maintain its kina facility rate at 7. 0 percent for the last nine months of 2010. our financial system remains resilient, well capitalized with adequate levels of liquidity, low level of non - performing loans and are highly profitable. in 2009, the central bank commenced work on the national payments project to promote a cost effective and an efficient national and international payment system. in 2010, the central bank commenced work in partnership with the world bank and undp to undertake a financial literacy survey during 2011, which will lead to specific intervention programs aimed at extending financial services to the unbanked and underserved segment of the population. this will compliment the growth of microfinance services in making a positive contribution to providing banking services to our rural population. on the fiscal front, the government recorded a small deficit of k36. 3 million ( 0. 2 per cent of gdp ) in 2009 compared to the fiscal deficit of k478. 5 million, ( 2. 2 per cent of gdp ) in 2008. in its mid year economic and fiscal outlook ( myefo ) report released on 31 july 2010, the government projects a revenue surplus of k533. 3 million for 2010. this surplus is expected to be spent through a supplementary budget later on in the year to meet financial commitments to the development partners and landowners of the png lng project. the government

term price stability. the framework for policy - making in the area of fiscal policy needs to inspire the same level of confidence as the framework for monetary policy. the crisis has shown that reforms to improve fiscal surveillance and control are needed in order to achieve this. these reforms are necessary, and they are under way. looking back, it is a pity that it has taken a crisis for everybody to realise this. looking ahead, i think that everybody now understands. let me close my remarks this morning – which i repeat have no bearing on current monetary policy matters – by recalling that in economic and monetary union we share a common destiny. wir teilen ein gemeinsames schicksal. thank you for your attention.