in the same period last year. however, liquid assets level can cater up to 24. 5 % of any additional loan and withdrawal requests. fixed assets decreased to 14. 1 % from 26. 6 % in june 2003. the road head the successes of the movement are shown by its performance over the years. i have mentioned some of the problem areas faced by the societies and we as the regulator. based on these experiences, the bank of papua new guinea came up with certain arrangements to address these issues with a view to protecting members ’ funds from mismanagement and abuses. the central bank has had to place societies under administration for noncompliance. currently, two societies remained under administration. and besides liquidation, we have issued stricter directives to suppress or control certain abusive practices and established an industry code of conduct requiring all directors and management to sign up before assuming responsibilities. the bank ’ s regulatory responsibility over the savings and loan industry will remain a big challenge in the future, due significantly to the way the legislative framework is set out. this is an industry where, over the years, the central bank has been overwhelmed with dealing on a lot of administrative matters and issues. these matters could be dealt with through a strong industry association or each society ’ s own internal risks management and control systems, and a strong corporate governance culture. the act, which governs the licensing and regulation of societies, requires that a society can only be licensed if it has secured more than 500 members who share a common interest. the composition of a board of directors of a society is determined by the members who perform a general election over a list of nominated candidates. over the years this requirement has given rise to the establishment of 15 small industries based societies and 5 provincial based societies. these, of course, were the surviving societies after the liquidation of some 100 odd ones. with such concentration of small interest groupings, experience have shown that there have been a continuing deficiency in establishing boards of directors with good background understanding of legal, accounting and business issues and ethics. these weaknesses, exacerbated by weak poor management reporting systems, have only resulted in ill - informed decision making and excessive borrowing beyond prudential limits. a number of those societies have been placed under statutory management due to these weaknesses to good corporate governance. another area worth noting is the role of an industry association in setting and influencing a strong governance and accountability regime towards an efficient self - regulating industry. a vibrant industry association could contribute to a successful self regulating

loi m bakani : png economic survey – “ from boom to gloom ” commentary by mr loi m bakani, deputy governor of the bank of papua new guinea, on the png economic survey : “ from boom to gloom ”, at the 2009 papua new guinea update, port moresby, 16 april 2009. * * * the survey is focused on : ( 1 ) the likely end of macroeconomic stability and economic growth that the png economy has enjoyed in the period 2003 to 2007 / 08, driven by high commodity prices and prudent management of macroeconomic policies – fiscal and monetary, although the survey does not explicitly give credit to the sound management of fiscal and monetary policies ; ( 2 ) the start of turbulent times arising from the adverse impact of lower commodity prices caused by lower demand for png ’ s export commodities, itself the consequence of the downturn in global economy ; and ( 3 ) a comparison of the national government ’ s management of the revenue windfalls of the 2000s and 1990s. the primary common factor that is analyzed extensively in the survey is international prices of primary export commodities, and the secondary but also important factor is government policies, both macro ( fiscal and monetary ) and micro economic policies. in the boom period, high international export commodity prices gave rise to increased foreign exchange reserves, government revenue, steady appreciation of the kina exchange rates, and low and stable inflation rates. government expenditure was within its means. whether there was enough productive government expenditure as opposed to consumption expenditure is another issue. on paper, there was promotion of capital, infrastructure, and other productive expenditures. actual effective spending of this was below budgeted levels. the survey did not explicitly give credit to prudent fiscal ( balanced budget ) and monetary policy management. these contributed to improved business confidence and macroeconomic stability and growth that the economy enjoyed. government spending and private sector credit growth supported the expansion in the economy. the survey gives evidence of these ; 6. 5 percent real gdp growth in 2007 and 7. 3 percent in 2008 quoted from the 2009 national budget, and employment growth, using the bank of png ’ s employment index. in the start of the gloom period, especially the second half of 2008, the declines in prices of png ’ s major export commodities will be the telling factor behind reduced government revenue, foreign exchange inflows, potential depreciation of the kina and high inflation rate. already, total government revenue was lower than budgeted in