loi m bakani : recent financial sector and economic developments in papua new guinea address by mr loi m bakani, deputy governor of the bank of papua new guinea, at the opening of the kimbe branch of anz bank ( png ) limited, kimbe, new west britain province, 23 november 2006. * * * acknowledgement honourable sinai brown, mp, minister for public services mr. garry r. tunstall, managing director of anz bank ( png ) limited mr. peter madden, ceo, post png bishop alphonse chaupa, kimbe diocese representing churches in wnb business and community leaders distinguished guests, ladies and gentlemen. i would like to thank the anz bank for inviting the governor of the bank of png mr. wilson kamit cbe to the official opening of its kimbe branch. however, he is unable to attend, as he is on his way overseas for an official engagement. he has asked me to represent the central bank. 1. introduction the bank of png is proud to see continued positive developments in the financial system and encourages the expansion of banking network throughout the country. today, the people of west new britain province have every reason to be joyful as they celebrate this important occasion – the opening of the kimbe branch of the anz bank. anz bank joins westpac and bsp to bring the number of commercial bank branches in the province to three, thus, providing an additional option of banking services for the general public. the opening of this anz kimbe branch highlights another milestone in the development of our banking and financial system. the central bank is glad to be invited because such events gives us an opportunity to talk about the developments that are occurring in our financial sector and the economy at large. 2. financial sector reform and role of the central bank i will talk on the developments in the financial sector and the current economic conditions later. let me first mention the underlying framework, which gave rise to the current positive developments we are now seeing in png. a major government initiative was the reforms to the financial sector, which began in 2000. a new central banking act and banks and financial institutions act were enacted. these gave the central bank a focused set of objectives, increase its independence and improved regulation and supervision of the financial system. the central banking act also limited the government ’ s access to central bank financing and introduced a new board with wider community representation. more recently, two other legislation

’ capital needs. as is known, this assessment was conducted by the consultancy firm oliver wyman, and its outcome was that banco popular evidenced capital needs in excess of €3. 2 billion. but in october 2012 it was concluded that both banco popular, and the other institution for which capital needs have been identified, namely ibercaja, could cover these needs by their own means, without resort to public funds and, therefore, also without transferring assets to sareb. i believe the resolution of banco popular, undertaken early in june in accordance with the provisions of the 2014 european directive, is set in a different context to that of the analysis of the crisis from 2008 to 2014, even if it is considered that the still - distant source of the problems of banco popular can be found in the period covered by the report. but here i shall naturally defer to what this commission should decide. regarding public aid, the report details in its various chapters the aid injected into the financial system during the crisis. this is summarised in tables 5. 5 and 5. 6 ( pp. 246 - 247 ). at the close of 2015, recorded total net funds assigned to supporting the spanish financial system were €60, 613 million, €39, 542 million of which relate to public funds provided by the frob and €21, 071 million to private funds provided by the dgs. naturally, these figures will vary depending on the recoverable value of the assets currently owned by the frob and the dgs. in terms of the comparison with other developed countries, there are various metrics to evaluate the fiscal cost of public aid. the most general one is the outstanding balance of accumulated public debt. in gross terms, spain ’ s public debt as a consequence of assistance to the financial sector was 4. 7 % of gdp in 2015 and 4. 6 % in 2016, in line with the average for the euro area. however, in terms of net debt assumed by the public sector ( accumulated liabilities minus the value of publicly owned assets ), the euro area average stood at end - 2015 at 1. 8 % of gdp and at 1. 9 % in 2016. greece and ireland are the countries that have assumed most net public debt ( around 20 % of gdp ), followed by slovenia and portugal ( 7 - 8 % of gdp ). in spain ’ s case, this figure in 2015 was 3. 7 % of gdp, and it had risen to 3. 8