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CONTENTS

1. General Overview 2

2. International Developments 6

3. Domestic Economic Conditions 10Domestic Economic ActivityEmploymentConsumer Price Index

4. Export Commodities Review 19Mineral ExportsAgriculture, Logs and Fisheries Exports

5. Balance of Payments 24

6. Monetary Developments 27Interest rates and LiquidityMoney SupplyLending

7. Public Finance 30

For the Record 32

Glossary of Terms and Acronyms 33

Reference ‘For the Record’ 39

Reference 40

Statistical Section

List of Tables S1

The contents of this publication may be reproduced provided the source is acknowledged.

PORT MORESBY05th January 2021

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1. GENERAL OVERVIEW

Economic indicators available to the Bank ofPapua New Guinea (the Bank) indicate thatdomestic economic activity declinedsignificantly in the second quarter of 2020.This was largely due to the introduction of thenation-wide State of Emergency (SOE) inApril as part of the containment measures toaddress the Coronavirus Disease 2019(COVID-19) pandemic.The decline ininternational commodity prices and exports,lower imports as well as a fall in annual privatesector employment are all indicative of theslump in economic activity. During the quarter,the kina exchange rate depreciated at a slowpace against all major currencies except thepound sterling.These currency movementsresulted in a fall in the Trade Weighted Index(TWI) by 0.5 percent to 29.79.The annualheadline inflation increased significantly to6.0 percent in the June quarter of 2020 from3.1 percent in the March quarter, mainly drivenby the containment measures of COVID-19.The core measures remained relatively lowdue to the slow pace of kina depreciation andlow imported inflation. With the significant fallin global and domestic demand, and expectedlow inflationary pressures, the Bankmaintained its neutral monetary policy stanceby keeping the monthly Kina Facility Rate(KFR) at 3.00 percent over the June quarter of2020.

Data from the Bank's Business Liaison Survey(BLS) show that the total nominal value ofsales in the formal private sector declined by11.5 percent in the March quarter of 2020,compared to an increase of 3.8 percent in theDecember quarter of 2019. Excluding themineral sector, sales declined by 8.7 percentin the March quarter, compared to an increaseof 3.4 percent in the December quarter of

2019. The decline was mainly due to the two-week lockdown in March imposed by theGovernment as measures were undertakento close international borders, suspenddomestic travels and scaled down businessoperations to ensure social distancing amongworkers and the general public to contain thespread of COVID-19. By sector, salesdeclined in all sectors except in the agriculture/forestry/fishing (AFF) and finance/business/other services sectors which increased. Byregion, sales declined in all the regions exceptthe Islands region. Over the year to March2020, total sales declined by 0.7 percent,compared to an increase of 7.9 percent in thecorresponding period of 2019. Excluding themineral sector, sales declined by 0.2 percent,compared to an increase of 10.0 percent inthe corresponding period of 2019.

The Bank's Employment Index show that thelevel of employment in the formal private sectorincreased by 1.6 percent in the June quarterof 2020, compared to a decline of 1.3 percentin the March quarter. Excluding the mineralsector, the level of employment increased by2.9 percent. The increase in employmentreflected the easing of the SOE measures asbusinesses began to slowly revamp orincrease their operations. By sector, the levelof employment increased in the AFF andretail sectors, while it fell in the wholesale,financial/business and other services,construction, mineral, transportation and themanufacturing sector. By region, the level ofemployment increased in the Momase(excluding Morobe), Southern (excludingNCD), Islands and Highlands regions, while itdeclined in Morobe and NCD. Over the yearto June 2020, the total level of employmentdeclined by 3.5 percent, compared to anincrease 4.3 percent in the correspondingperiod of 2019. Excluding the mineral sector,

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the level of employment fell by 3.0 percentover the year to June 2020, compared to anincrease of 1.9 percent over the year to June2019.

Quarterly headline inflation, as measured bythe Consumer Price Index (CPI), was 3.4percent in the June quarter of 2020, comparedto 1.1 percent in the March quarter of 2020.There were increases in the 'AlcoholicBeverages, Tobacco and Betelnut', 'Health','Transport', 'Restaurants and Hotels','Housing', 'Food and Non-AlcoholicBeverages', 'Recreation', 'Clothing andFootwear', and 'Education' expendituregroups, which more than offset declines in the'Household Equipment', 'Communication', and'Miscellaneous' expenditure groups. By urbancentre, prices increased in all the surveyedcentres. Annual headline inflation was 6.0percent in the June quarter of 2020, comparedto 3.1 percent in the March quarter of 2020.

In the June quarter of 2020, the US dollarappreciated against all major currenciesexcept the Japanese yen. The US dollarappreciated against the pound sterling by 3.0percent, the Australian dollar by 0.5 percentand the euro by 0.3 percent. Against theJapanese yen, it depreciated by 1.2 percent.

In the June quarter of 2020, the average dailykina exchange rate depreciated against theJapanese yen by 2.3 percent to ¥31.2046,the US dollar by 1.0 percent to US$0.2860,the euro by 0.8 percent to €0.2637 and theAustralian dollar by 0.6 percent to A$0.4430.Against the pound sterling, it appreciated by2.1 percent to  £0.2338. These currencymovements resulted in the depreciation of theTWI by 0.5 percent to 29.79 in the June quarterof 2020.

The weighted average kina price of PNG'sexports, excluding LNG, decreased by 5.0percent in the June quarter of 2020, comparedto the corresponding quarter of 2019. Theweighted average kina price of mineral exportsincreased by 0.1 percent, reflecting higherkina prices for all mineral commodities. Foragricultural, logs and marine product exports,the weighted average kina price decreasedby 22.8 percent, due to lower kina prices forcopra oil, rubber, logs and marine products.Excluding logs, the weighted average kinaprice of agricultural and marine product exportsdecreased by 27.7 percent in the June quarterof 2020, compared to the correspondingquarter of 2019. Lower international pricesaccounted for the decline.

The balance of payments recorded an overallsurplus of K43 million for the first six months of2020, compared to a deficit of K388 million inthe corresponding period of 2019. A surplusin the current account more than offset a deficitin the capital and financial account.

The surplus in the current account was due toa trade surplus and higher net transfer receipts,combined with lower net service and incomepayments.

The deficit in the capital and financial accountwas attributed to a net outflow from direct andother investments reflecting related partytransactions and build-up in offshore foreigncurrency account balances of mineralcompanies, respectively. The net Governmentand private sector loan repayments alsocontributed to the outflows.

The level of gross foreign exchange reservesat the end of June 2020 was K7,854.2 (US$2,309.1) million, sufficient for 5.4 months oftotal and 9.1 months of non-mineral import

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covers.

The Central Bank, maintained a neutral stanceof monetary policy during the June quarter of2020. The monthly policy rate, the Kina FacilityRate (KFR) was maintained at 3.00 percent,after it was reduced from 5.00 percent in thefirst quarter of the year to counter the adverseeffects of the COVID-19 pandemic on theeconomy.

The Bank utilised its Open Market Operation(OMO) instruments in the conduct of monetarypolicy to manage liquidity. Liquidity in thebanking system remained high from theQuantitative Easing (QE) liquidity injection inthe March quarter, coupled with lower demandfor private sector lending. In the June quarter,there was a net retirement in CBBs of K441.5million to support the easing stance. On theother hand, the Government made a netissuance of K51.8 million and K1,733.8 millionin Treasury bills and Treasury bonds (knownas COVID-Bonds), respectively. The CentralBank's intervention in the foreign exchangemarket also assisted in diffusing some of thekina liquidity during the period. The CashReserve Requirement (CRR) for thecommercial banks remained at 7.00 percentin the June quarter, after being reduced from10.0 percent in the previous quarter.

The average level of broad money supply(M3*) slightly increased by 0.8 percent in theJune quarter of 2020, compared to an increaseof 2.4 percent in the March quarter. Thisoutcome was due to increases in the averagenet foreign assets (NFA) and net domesticassets (NDA) of the banking system. Averagenet domestic claims outstanding, excludingnet claims on the Central Government,increased by 0.7 percent in the June quarter of2020, following an increase of 1.1 percent in

the previous quarter. This reflected an increasein average net claims on the private sector,which more than offset decreases in publicnon-financial corporations and other financialcorporations (OFCs).

The average level of monetary base (reservemoney) increased by 0.3 percent during theJune quarter of 2020, compared to a declineof 1.1 percent in the previous quarter. Thisreflected an increase in the average level ofcommercial bank deposits held at the CentralBank, which more than offset a decline incurrency in circulation.

The NFA of the Financial Corporations (FCs),comprising Deposit Corporations (DCs) andOFCs, increased by 13.1 percent to K9,349.7million in the June quarter of 2020, comparedto a decline of 13.9 percent in the previousquarter. This reflected increases in NFA of theDCs including both the Central Bank andOther Depository Corporations (ODCs), andOFCs.

Net claims on the Central Government by FCsdeclined by 1.5 percent to K13,620.1 millionin the June quarter of 2020, following anincrease of 3.7 percent in the previous quarter.This resulted from a net retirement ofGovernment securities and an increase inGovernment deposits partly reflecting the drawdown from the International Monetary Fund’s(IMF) Rapid Credit Facility (RCF).

In the June quarter of 2020, total domesticcredit extended by FCs to the private sector,public non-financial corporations and'Provincial and Local Level Governments'declined by 0.8 percent to K18,057.2 million,compared to an increase of 1.3 percent in theprevious quarter. This reflected a decline ofK175.5 million in claims by public non-financial

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corporations, which more than offset anincrease of K23.4 million in credit to the privatesector. The decline in the public non-financialcorporations reflected repayments by theState Owned Enterprises (SOEs), while theincrease in credit to the private sector byODCs (mainly commercial banks) reflectedadvances to the 'Real estate, Renting &Business Services', 'Transport andCommunication', 'Building & Construction','Electricity Gas & Water Supply' and'Wholesale Trade' sectors.

The fiscal operations of the NationalGovernment over the six months to June2020 show a deficit of K2,085.8 million,compared to a deficit of K1,667.4 million inthe corresponding period of 2019. Thesignificantly higher deficit reflected lowerGovernment revenue receipts.

Total revenue and grants over the six monthsto June was K4,814.6 million, 17.1 percentlower than in the same period of 2019 andrepresents 42.4 percent of the revised 2020Budget. This reflected declines in non-tax

revenues.

Total expenditure for the six months to June2020 was K6,900.4 million, 7.7 percent lowerthan in the corresponding period of 2019, andrepresents 38.4 percent of the revised 2020Budget.

As a result of these developments in revenueand expenditure, the Government recorded abudget deficit of K2,085.8 million. The deficitwas financed from external and domesticsources of K1,183.5 million and K902.3million, respectively. Net external financingwas mainly from extraordinary financing ofK1,240.6 million from the IMF's RCF andK385.4 million from concessional sources,which more than offset a net repayment ofK442.5 million to commercial sources. Netdomestic financing was K482.7 million,comprising of K1,371.2 million, K254.3 millionand K0.3 million from BPNG, ODCs, OFCsand public non-financial corporations,respectively. These more than offset a netretirement of Government securities ofK1,206.2 million by other resident sectors.

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2. INTERNATIONAL DEVELOPMENTS

Global economic activity declined in thesecond quarter of 2020, with the continuousadverse impact of the COVID-19 pandemic.Although most countries opened up theireconomies in April, activity in the developedeconomies, including the United States (US),United Kingdom (UK) and the euro areadeclined in the second quarter, reflecting theenforcement of various COVID-19 pandemiccontainment measures. Capital andconsumption spending were severelyaffected, as most advanced economiesentered into recession. China on the otherhand, showed signs of recovery in the secondquarter reflecting some pickup in domesticand external demand. Other emerging marketand developing economies were alsonegatively impacted by the pandemic.According to the IMF’s World EconomicUpdate (WEO) for June 2020, the globaleconomy is forecasted to decline by 4.9percent in 2020.

In April, leaders of the Group of Seven (G7)economies held a virtual Summit Meeting todiscuss among other things, the globaleconomic conditions and the impact of theCOVID-19 pandemic. They discussed theireconomic conditions as well as the preventivemeasures against the spread of COVID-19.The leaders agreed to fast track thedevelopment of a vaccine through internationalcooperation between the public and privatesectors, and provide aid to the less fortunateand worse affected countries. They alsoagreed on preparation to safely open up theireconomies and recommence economicactivity under the "new normal" environment.

In June, the 179th Meeting of the Organization

of the Petroleum Exporting Countries (OPEC)was held virtually. The members discussedthe developments in the oil market since March2020 and the outlook for the remainder of theyear and for 2021. They reaffirmed their supportto the OPEC and Non-OPEC agreement, andagreed to maintain member country productionquotas in May. They noted that the gradualrelaxation of the COVID-19 lockdownmeasures across the globe would lead to apick-up in global economic activity and drivedemand for crude oil. They also noted that therecovery may be slow and may take time forthe oil market to return to normalcy.

Also in June, the 36th Association of South-East Asian Nations (ASEAN) summit washeld in Hanoi, Vietnam, under the theme'Cohesive and Responsive ASEAN 2020'.The members discussed the COVID-19pandemic and options to address it, amongstother things. They acknowledged the immensehuman and socio-economic costs of thepandemic and reaffirmed their commitmentto implementing targeted policies to deal withit. They stressed the importance ofstrengthening their regional public healthcapaci ty and emergency responsemechanisms to enhance preparedness andhealth security, through regional andinternational cooperation.

In the US, real GDP declined by 9.0 percentover the year to June 2020, compared to agrowth of 2.0 percent over the same period in2019. The significant decline was due tocontainment measures of the COVID-19pandemic which decreased personalconsumption spending, exports, privateinventory investment, and fixed investment,as well as state and local governmentspending. The latest IMF forecast is for realGDP to decline by 8.0 percent in 2020.

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Industrial production declined by 7.7 percentover the year to June 2020, compared to 1.1percent over the same period in 2019. Thiswas attributed to lower activity in themanufacturing and mining sectors. ThePurchasing Managers Index (PMI) increasedto 52.6 in June 2020, compared to 51.7 inJune 2019. This outcome reflected a continuedrecovery in manufacturing sector following theeasing of the COVID-19 containmentmeasures. Retail sales grew by 2.2 percentover the year to June 2020, compared to 3.3percent over the corresponding period in2019. The outcome was driven by a higherdemand in electronic commerce and forgeneral merchandise as shops reopened foroperations. The unemployment rate was 11.1percent in June 2020, compared to 3.7 percentin June 2019, reflecting the scaling back orshutting down of business activity associatedwith the containment measures of the COVID-19 pandemic.

Consumer prices increased by 0.6 percentover the year to June 2020, compared to anincrease of 2.6 percent over the correspondingperiod in 2019. Broad money supplyincreased by 22.9 percent over the year toJune 2020, compared to an increase of 4.7percent over the corresponding period in2019. The Federal Reserve Bank maintainedthe federal funds rate between the target rangeof 0.0 - 0.25 percent in June 2020 to supportlending to businesses hit hard by thepandemic.

The trade deficit narrowed to US$170.5 billionover the year to June 2020, compared toUS$224.5 billion over the correspondingperiod in 2019. The lower outcome reflecteda drop in both exports and imports.

In Japan, real GDP declined by 9.9 percent

over the year to June 2020, compared to agrowth of 1.2 percent over the same period in2019. The decline reflected lower exports asglobal demand fell, partly reflecting thedisruptions in the global supply chains, and adrop in consumer and capital spending. Thelatest IMF forecast is for real GDP to declineby 5.8 percent in 2020.

Industrial production declined by 18.2 percentover the year to June 2020, compared to a fallof 3.8 percent over the same period in 2019.The car, machinery, and steel industries aswell as other industries were hit hard by asharp fall in both domestic and externaldemand due to the pandemic. Retail salesdeclined by 1.2 percent over the year to June2020, compared to an increase of 0.5 percentover the same period in 2019, amid theprolonged impact of the pandemic. Theunemployment rate was 2.8 percent in June2020, compared to 2.3 percent in June 2019.

Consumer prices increased by 0.1 percentover the year to June 2020, compared to anincrease of 1.1 percent over the correspondingperiod in 2019. Broad money supply (M3)increased by 5.9 percent over the year to June2020, compared to an increase of 2.3 percentover the same period in 2019. The Bank ofJapan (BOJ) kept its key short-term interestrate at negative 0.1 percent and maintainedlong-term borrowing costs around zeropercent during its June meeting. At the sametime, the BOJ increased lending packagesfor cash-strapped firms aimed at mitigatingthe negative impact of the pandemic.

The trade deficit was US$5.7 billion over theyear to June 2020, compared to a tradesurplus of US$4.3 bil l ion over thecorresponding period in 2019. The outcomewas mainly attributed to a drop in exports due

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to the fall in global demand.

In the euro area, real GDP declinedsignificantly by 14.7 percent over the year toJune 2020, compared to 1.1 percent over thesame period in 2019. The decline was due tothe containment measures of the COVID-19pandemic reflecting lower Governmentspending and investment as well as the scalingback or shutting down of business operations,which reduced household consumption andprivate investment. The latest IMF forecast isfor real GDP to decline by 10.2 percent in2020.

Industrial production declined by 12.0 percentover the year to June 2020, compared to adecline of 2.6 percent over the same period in2019. The fall reflected lower activity in themining, manufacturing and utilities sectorsdue to the COVID-19 containment measures.Retail sales increased by 1.3 percent over theyear to June 2020, compared to an increaseof 2.8 percent in the same period of 2019. Theunemployment rate was 7.8 percent in June2020, compared to 7.5 percent in June 2019.

Consumer prices in the euro area, asmeasured by the Harmonized Index ofConsumer Prices, increased by 0.3 percentover the year to June 2020, compared to anincrease of 1.3 percent over the same periodin 2019. The increase was mainly influencedby the lower prices of services and energy.Broad money supply increased by 9.2 percentover the year to June 2020, compared to anincrease of 4.6 percent over the correspondingperiod in 2019. The European Central Bank(ECB) maintained its refinancing rate at zeropercent in June, while it launched a newbackstop facility on the 25th of June to provideprecautionary euro repo lines to central banksoutside the euro area in response to the

pandemic.

The trade surplus widened to US$25.1 billionover the year to June 2020, compared to asurplus of US$23.0 billion over the year toJune 2019, reflecting a significant drop inimports, mainly fuel.

In the UK, real GDP declined by 21.5 percentover the year to June 2020, compared to agrowth of 1.2 percent in the correspondingperiod of 2019. The significant decline wasdue to the widespread disruption to economicactivity due to the COVID-19 pandemic, whichadversely affected household consumption,fixed investment and exports. The latest IMFforecast is for real GDP to fall by 10.2 percentin 2020.

Industrial production declined by 12.1 percentover the year to June 2020, compared to adecline of 0.6 percent over the correspondingperiod in 2019. The decline in production wasmainly in the manufacturing and mining sectors.Retail sales dropped by 1.6 percent over theyear to June 2020, compared to a decline by3.6 percent over the corresponding period in2019, mainly due to lower spending onhousehold i tems and clothes. Theunemployment rate was 3.9 percent in June2020, the same as in June 2019.

Consumer prices increased by 0.6 percentover the year to June 2020, compared to 2.0percent over the same period in 2019. Broadmoney supply increased by 13.1 percent overthe year to June 2020, compared to 2.3 percentover the corresponding period of 2019. TheBank of England maintained its key bankbase rate at a record low of 0.1 percent inJune, and increased the target stock of the UKGovernment bonds to support lending to theprivate sector, amidst the down turn in the

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economy.

The trade account deficit was US$7.2 billionover the year to June 2020, compared to adefici t of US$10.9 bil l ion over thecorresponding period in 2019. The lower deficitreflected higher imports relative to exports.

In China, real GDP grew by 3.2 percent overthe year to June 2020, compared to 6.2 percentover the same period in 2019. The growthreflected the re-opening of businessoperations following the shutdown due to theCOIVD-19 pandemic. Consumption spendingfrom households, businesses and theGovernment sector remained low. The IMFmaintained its forecast for real GDP to growby 1.0 percent in 2020.

Industrial production increased by 6.9 percentover the year to June 2020, compared to anincrease of 6.3 percent over the same periodin 2019. Retail sales declined by 1.8 percentover the year to June 2020, compared to anincrease of 9.8 percent over the same periodin 2019. The household consumptionremained low as the COVID-19 restrictionswere slowly lifted. The unemployment ratewas 3.8 percent in June 2020, compared to3.6 percent in June 2019.

Consumer prices rose by 2.5 percent over theyear to June 2020, compared to an increaseof 2.8 percent over the same period in 2019.Broad money supply increased by 11.2 percentover the year to June 2020, compared to anincrease of 8.5 percent over the correspondingperiod in 2019. The People's Bank of China(PBOC) maintained its policy rate at 3.85percent in June, as it pledged a strongermonetary policy response to support theexpansionary fiscal policy through better policycoordination and implementation to help offset

the impact of the COVID-19 pandemic oneconomic growth.

The trade account surplus was US$46.4 billionover the year to June 2020, compared to asurplus of US$51.0 bil l ion from thecorresponding period in 2019. The lowersurplus was attributed to lower global demandassociated with the COVID-19 pandemic.

In Australia, real GDP declined by 6.3 percentover the year to June 2020, compared to anincrease of 1.4 percent over the same periodin 2019. The significant contraction ineconomic activity was due to the containmentmeasures of the COVID-19 pandemic. Thelatest IMF forecast is for real GDP to declineby 4.5 percent in 2020.

Industrial production declined by 0.1 percentover the year to June 2020, compared to anincrease of 1.9 percent over the same periodin 2019. Retail sales declined by 3.4 percentover the year to June 2020, compared to anincrease of 2.4 percent over the correspondingperiod in 2019. This reflected lower demandfor clothing and food, and sales in cafes andrestaurants. The unemployment rate was 7.5percent in June 2020, compared to 5.2 percentin June 2019, as the containment measuresresulted in the laying off of workers.

Consumer prices declined by 0.3 percentover the year to June 2020, compared to anincrease of 1.6 percent over the correspondingperiod in 2019. The negative inflation outcomewas due to lower prices for transport,merchandise, education and recreationservices. Broad money supply increased by8.5 percent over the year to June 2020,compared to an increase of 3.9 percent overthe corresponding period in 2019. TheReserve Bank of Australia maintained its

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2014 2015 2016 2017 2018 2019 2020

United States dollar per kinaEXCHANGE RATES1

0.40

0.25

0.35

0.30

0.45

Australian dollar per kina

0.45

0.35 2014 2015 2016 2017 2018 2019 2020

0.50

0.40

Japanese yen per kina

30 2014 2015 2016 2017 2018 2019 2020

35

40

45

50

2014 2015 2016 2017 2018 2019 2020

Euro per kina

0.30

0.35

0.25

0.25

Special Drawing Rights per kina

0.20

0.30

2014 2015 2016 2017 2018 2019 2020

0.20

1 Charts reflects end of quarter period and not quarterlyaverages.

official cash rate at the lowest historical rate of0.25 percent in June 2020, as the economyexperienced its biggest contraction since the1930s.

The trade account recorded a surplus ofUS$17.4 billion over the year to June 2020,compared to a surplus of US$14.5 billion overthe same period in 2019. The higher surpluswas due to increased exports relative toimports.

In the June quarter of 2020, the US dollarappreciated against all the major currenciesexcept the Japanese yen.The US dollarappreciated against the pound sterling by 3.0percent, the Australian dollar by 0.5 percentand the euro by 0.3 percent. Against theJapanese yen, it depreciated by 1.2 percent.

In the June quarter of 2020, the average dailykina exchange rate depreciated against theJapanese yen by 2.3 percent to ¥31.2046,the US dollar by 1.0 percent to US$0.2860,the euro by 0.8 percent to €0.2637 and theAustralian dollar by 0.6 percent to A$0.4430.Against the pound sterling, it appreciated by2.1 percent to  £0.2338. These currencymovements resulted in the depreciation of theTWI by 0.5 percent to 29.79 in the June quarterof 2020.

3. DOMETIC ECONOMIC CONDITIONS

DOMESTIC ECONOMIC ACTIVITY

Data from the Bank's Business Liaison Survey(BLS) show that the total nominal value ofsales in the formal private sector declined by11.5 percent in the March quarter of 2020,compared to an increase of 3.8 percent in theDecember quarter of 2019. Excluding the

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mineral sector, sales declined by 8.7 percentin the March quarter, compared to an increaseof 3.4 percent in the December quarter of2019. This outcome mainly reflected the two-week lockdown in March and the introductionof containment measures to counter the spreadof the COVID-19 pandemic. By sector, salesdeclined in the construction, manufacturing,mineral, transportation, retail and wholesalesectors, while it increased in the agriculture/forestry/fishing (AFF) and financial/business/other services sectors. By region, salesdeclined in all the regions except the Islandsregion. Over the year to March 2020, totalsales declined by 0.7 percent, compared to anincrease of 7.9 percent in the correspondingperiod of 2019. Excluding the mineral sector,sales declined by 0.3 percent, compared to anincrease of 10.0 percent in the correspondingperiod of 2019.

In the construction sector, sales declined by27.5 percent in the March quarter of 2020,compared to an increase of 22.8 percent in theprevious quarter. This outcome reflected theslowdown in new road construction andmaintenance work by the Government in theHighlands, Islands and Southern regions,completion of the Alotau Market in Milne Bayand reduced road maintenance activity by theOk Tedi Mine. The two-week lockdown inMarch relating to the COVID-19 pandemicalso affected construction activity Over theyear to March 2020, sales rose by 1.8 percent,compared to a decline of 65.3 percent in thecorresponding period of 2019.

In the manufacturing sector, sales declined by18.0 percent in the March quarter of 2020,compared to an increase of 11.9 percent in theprevious quarter. This outcome reflected thetwo-week lockdown as companies reducedtheir workforce to meet the social distancing

requirement for the COVID-19 pandemic.There was lower demand for tobaccoproducts, soft drinks, canned tuna, processedfuel products and food, and generalmerchandise. Over the year to March 2020,sales increased by 1.2 percent, compared toa decline of 18.1 percent in the correspondingperiod of 2019.

In the mineral sector, sales declined by 15.4percent in the March quarter of 2020,compared to an increase of 4.6 percent in theprevious quarter. This outcome partly reflectedthe impact of the COVID-19 pandemic. Thedecline reflected lower production of crudeoil, natural gas, nickel, gold and copper bymajor producers including Oil Search, Ok Tedi,Ramu Nickel and Porgera mines. Over theyear to March 2020, sales decreased by 2.6percent, compared to an increase of 5.0percent in the corresponding period of 2019.

In the transportation sector, sales fell by 12.9percent in the March quarter of 2020,compared to an increase of 1.6 percent in theDecember quarter of 2019. This outcomewas due to the impact of the COVID-19pandemic with lower sales recorded forpassenger air travel and a decline in thedemand for sea freight services. Over theyear to March 2020, sales declined by 11.5percent, compared to an increase of 25.4percent in the corresponding period of 2019.

In the retail sector, sales fell by 9.4 percent inthe March quarter of 2020, following a declineof 0.3 percent in the December quarter of2019. This outcome mainly reflected the impactof the COVID-19 pandemic. The fall in demandfor food and general merchandise, tyres andspare parts, pesticides and agricultural toolscontributed to the decline. Over the year toMarch 2020, sales declined by 0.6 percent,

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compared to an increase of 0.9 percent in thecorresponding period of 2019.

In the wholesale sector, sales decreased by2.6 percent in the March quarter of 2020,compared to an increase of 3.2 percent in theDecember quarter of 2019. This outcomemainly reflected the impact of the COVID-19pandemic. The decline reflected lowerdemand for food and general merchandise,tyres and spare parts, and pharmaceuticalproducts. Over the year to March 2020, salesincreased by 7.0 percent, compared to anincrease of 58.8 percent in the correspondingperiod of 2019.

In the AFF sector, sales increased by 11.5percent in the March quarter of 2020,compared to a decline of 18.4 percent in theDecember quarter of 2019. The increase wasmainly attributed to higher production andexport of palm oil as well as tuna catchment.Over the year to March 2020, sales increasedby 8.6 percent, compared to an increase of5.8 percent in the corresponding period of2019.

In the financial/business/other services sector,sales increased by 1.7 percent in the Marchquarter of 2020, same as in the Decemberquarter of 2019. The increase reflected highersales by a major communication companyand for kit homes which more than offset lowerearnings of fees and charges by commercialbanks. Over the year to March 2020, salesincreased by 5.6 percent, compared to adecline of 2.2 percent in the correspondingperiod of 2019.

By region, sales declined in all the regionsexcept the Islands region. In the Southern(excluding NCD) region, sales fell by 47.9percent in the March quarter of 2020,

compared to an increase of 15.8 percent inthe December quarter of 2019. This outcomemainly reflected the impact of the COVID-19pandemic. The decline was due to lowerproduction and export of copper ore, a drop inpassenger air travel, a fall in activity by seafreight services and lower demand for foodand general merchandise. Over the year toMarch 2020, sales decreased by 26.4percent, compared to an increase of 32.2percent in the corresponding period of 2019.

In the Momase region, sales declined by 38.9percent in the March quarter of 2020,compared to a decline of 5.4 percent in theprevious quarter. This outcome mainlyreflected the impact of the COVID-19pandemic. The decline was due to a fall in theproduction and export of nickel, a drop inproduction of canned tuna and tobaccoproducts, as well as lower demand for foodand general merchandise. Lower demand forair passenger travel also contributed to thedecline. Over the year to March 2020, salesincreased by 1.0 percent, compared to adecline of 62.0 percent in the correspondingperiod of 2019.

In NCD, sales declined by 7.1 percent in theMarch quarter of 2020, compared to anincrease of 6.5 percent in the previous quarter.This outcome mainly reflected the impact ofthe COVID-19 pandemic The decline wasdue to lower demand for air passenger travels,food and general merchandise,andpharmaceutical products. The fall in theearnings of the commercial banks and hotelsalso contributed to the decline. Over the yearto March 2020, sales increased by 1.2 percent,compared to a decline of 10.5 percent in thecorresponding period of 2019.

In the Highlands region, sales declined by 4.6

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percent in the March quarter of 2020,compared to an increase of 14.1 percent inthe December quarter of 2019. This outcomemainly reflected the impact of the COVID-19pandemic. The decline was due to lowerproduction and export of gold, crude oil andcoffee. The fall in demand for food and generalmerchandise and air passenger travel, alsocontributed to the decline. Over the year toMarch 2020, sales increased by 14.0 percent,compared to an increase of 34.9 percent inthe corresponding period of 2019.

In Morobe, sales declined by 3.7 percent inthe March quarter of 2020, following a marginalincrease in the December quarter of 2019.This outcome mainly reflected lowerproduction and demand for beverages, foodand general merchandise and a drop in airpassenger travel. Over the year to March2020, sales decreased by 4.4 percent,compared to an increase of 6.9 percent in thecorresponding period of 2019.

In the Islands region, sales increased by 19.6percent in the March quarter of 2020,compared to a decline of 14.9 percent in theprevious quarter. The increase mainlyreflected higher production and export of goldand palm oil. Over the year to March 2020,sales declined by 16.6 percent, compared toan increase of 34.2 percent in thecorresponding period of 2019.

EMPLOYMENT

The Bank's Employment Index shows that thelevel of employment in the formal private sectorincreased by 1.2 percent in the June quarterof 2020, compared to a decline of 1.3 percentin the March quarter of 2020. Excluding themineral sector, the level of employmentincreased by 2.0 percent. By sector, the level

of employment increased in the AFF andretail sectors while it fell in the wholesale,financial/business and other services,construction, mineral, transportation andmanufacturing sectors. By region, the level ofemployment increased in the Momase(excluding Morobe), Southern (excludingNCD), Islands and Highlands regions, while itdeclined in Morobe and NCD. Over the yearto June 2020, the total level of employmentdeclined by 3.9 percent, compared to anincrease 4.3 percent in the correspondingperiod of 2019. Excluding the mineral sector,the level of employment fell by 3.8 percentover the year to June 2020, compared to anincrease of 1.9 percent over the year to June2019.

In the AFF sector, the level of employmentincreased by 8.0 percent in the June quarter,compared to an increase of 2.6 percent in theMarch quarter of 2020. The increase reflectedthe hiring of seasonal workers for harvestingof palm oil and tea and catchment of tuna.Over the year to June 2020, the level ofemployment increased by 1.7 percent,compared to an increase of 1.9 percent overthe year to June 2019.

In the retail sector, the level of employmentincreased by 4.0 percent in the June quarterof 2020, compared to a fall of 5.8 percent inthe previous quarter. The increase was mainlyassociated with higher demand for chemicalproducts. Over the year to June 2020, the levelof employment fell by 1.1 percent, comparedto an increase of 3.5 percent in the sameperiod of 2019.

In the wholesale sector, the level of employmentdeclined by 5.7 percent in the June quarter of2020, compared to a drop of 4.3 percent inthe previous quarter. This outcome was driven

14

2014 2015 2016 2017 2018 2019 2020

Formal Private Sector Employment IndexBased: March 2002=100

170

180

175

165

160

155

by a general decline in demand for food,drinks and chemical products due to the impactof COVID-19 containment measures. Overthe year to June 2020, the level of employmentdeclined by 12.7 percent, compared to a fallof 1.8 percent over the year to June 2019.

In the financial/business and other servicessector, the level of employment declined by4.9 percent in the June quarter of 2020,compared to a fall of 6.7 percent in the Marchquarter of 2020. The decline mainly reflectedthe laying-off of staff by hotels due to the SOEcontainment measures associated with theCOVID-19 pandemic. Over the year to June2020, the level of employment fell by 17.1percent, compared to an increase of 8.8percent over the year to June 2019.

In the construction sector, the level ofemployment declined by 4.4 percent in theJune quarter of 2020, compared a fall of 10.2percent in the March quarter of 2020. Thedecline mainly reflected the laying-off ofworkers after the completion of road projectsin NCD and the Islands region. Over the yearto June 2020, the level of employment fell by18.9 percent, compared to a decline of 8.5percent over the year to June 2019.

In the mineral sector, the level of employmentfell by 3.1 percent in the June quarter of 2020,compared to an increase of 1.8 percent in theMarch quarter. The decline reflected a voluntaryredundancy exercise carried out by a major oilcompany and the laying-off of workers by amining company. Over the year to June 2020,the level of employment declined by 2.1percent, compared to an increase of 24.9percent over the year to June 2019.

In the transportation sector, the level ofemployment fell by 2.5 percent in the June

quarter of 2020, compared to a marginaldecline of 0.3 percent in the previous quarter.This outcome was due to the laying-off of staffby airline and trucking companies due to theSOE measures. Over the year to June 2020,the level of employment fell by 1.4 percent,compared to a decline of 13.5 percent overthe year to June 2019.

In the manufacturing sector, the level ofemployment fell by 0.5 percent in the Junequarter of 2020, while there was no change inthe previous quarter. In addition to a fewresignations, the decline was due to lowerdemand for steel, cement and some foodproducts. Over the year to June 2020, thelevel of employment increased by 2.6 percent,compared to an increase of 6.3 percent overthe year to June 2019.

By region, the level of employment increasedin the Momase, Southern, Islands andHighlands regions, while it fell in Morobe andNCD. In the Momase region, the level ofemployment grew by 9.0 percent in the Junequarter of 2020, compared to a decline of 0.8percent in the March quarter of 2020. Theincrease was attributed to higher tunacatchment and processing of tuna loining.Over the year to June 2020, the level ofemployment increased by 2.9 percent,

15

compared to an increase of 2.3 percent overthe year to June 2019.

In the Southern region, the level of employmentincreased by 6.0 percent in the June quarterof 2020, compared to a marginal increase of0.2 percent in the previous quarter of 2020.The increase was primarily attributed to therecruitment of seasonal workers for palm oilharvesting. Over the year to June 2020, thelevel of employment fell by 0.4 percent,compared to an increase of 15.4 percent overthe year to June 2019.

In the Islands region, the level of employmentincreased by 3.3 percent in the June quarterof 2020, compared to an increase of 1.4percent in the previous quarter. The increasereflected higher production and processing ofbalsa wood and the recruitment of casualworkers for palm oil harvesting by a majorpalm oil company. Over the year to June2020, the level of employment fell by 1.0percent, compared to a fall of 4.2 percent overthe year to June 2019.

In the Highlands region, the level ofemployment increased by 2.7 percent in theJune quarter of 2020, compared to a declineof 2.1 percent in the March quarter of 2020.The increase reflected the hiring of seasonalworkers for the harvesting of tea and therecruitment of casual workers by a coffeebuyer to process coffee beans as the coffeeseason picked up. Over the year to June2020, the level of employment fell by 2.9percent, compared to an increase of 16.8percent over the year to June 2019.

In Morobe, the level of employment fell by 5.9percent in the June quarter, compared to adecline of 1.9 percent in the previous quarter.The decrease reflected the laying-off of staff

by a trucking company, a stevedoring companyand an airline company. A major hotel alsolaid off workers as demand for its services felldue to the COVID-19 SOE containmentmeasures. Over the year to June 2020, thelevel of employment fell by 8.4 percent,compared to an increase of 4.1 percent overthe year to June 2019.

In NCD, the level of employment declined by2.2 percent in the June quarter of 2020,compared to a fall of 3.6 percent in the Marchquarter. The decline reflected the laying-off ofstaff mainly by two major airline companiesand hotels due to the SOE containmentmeasures including a lockdown. Over the yearto June 2020, the level of employment fell by8.5 percent, compared to an increase of 5.3percent over the year to June 2019.

CONSUMER PRICE INDEX

Quarterly headline inflation, as measured bythe Consumer Price Index (CPI), was 3.4percent in the June quarter of 2020, comparedto 1.1 percent in the March quarter of 2020.The increase was mainly due to the impact ofthe COVID-19 pandemic measures on supplychains and prices. There were increases inthe 'Alcoholic Beverages, Tobacco andBetelnut', 'Health', 'Transport', 'Restaurants andHotels', 'Housing', 'Food and Non-AlcoholicBeverages', 'Recreation', 'Clothing andFootwear', and 'Education', expendituregroups which more than offset declines in the'Household Equipment', 'Communication', and'Miscellaneous' expenditure groups. By urbancentre, prices increased in all the surveyedcentres. Annual headline inflation was 6.0percent in the June quarter of 2020, comparedto 3.1 percent in the March quarter of 2020.

The CPI for the 'Alcoholic Beverages, Tobacco

16

and Betelnut' expenditure group increased by13.6 percent in the June quarter of 2020,compared to a decline of 0.5 percent in theMarch quarter. This was mainly attributed to alarge increase in the 'betelnut and mustard'sub-group of 18.6 percent, with lesserincreases in the 'tobacco' and 'alcoholicbeverages' sub-groups of 4.0 percent and 2.1percent, respectively. This expenditure groupcontributed 2.3 percentage points and 3.1percentage points to the quarterly and annualmovements in overall CPI inflation,respectively.

The CPI for the 'Health' expenditure groupincreased by 6.1 percent in the June quarterof 2020, compared to an increase of 0.6percent in the March quarter. The increase inthe 'medical services' sub-group of 16.1percent more than offset a decline in the'medical supplies' sub-group of 0.9 percent.This expenditure group contributed 0.2percentage points to both the quarterly andannual movements in overall CPI inflation.

The CPI for the 'Transport' expenditure groupincreased by 4.1 percent in the June quarterof 2020, from an increase of 3.9 percent in theprevious quarter. This was attributed toincreases in the 'operations of transport', 'fares'and 'motor vehicle purchases' sub-groups of9.8 percent, 9.4 percent and 3.3 percent,respectively, which more than offset a declinein the 'fuel and lubricants' subgroup of 12.9percent. This expenditure group contributed0.5 percentage points and 1.1 percentagepoints to the quarterly and annual movementsin the overall CPI inflation, respectively.

Prices in the 'Restaurants and Hotels'expenditure group increased by 3.2 percentin the June quarter of 2020, compared to anincrease of 1.9 percent in the March quarter of

2020. There were increases in the 'hotelaccommodation' and 'takeaway foods' sub-groups of 5.6 percent and 2.8 percent,respectively. This expenditure groupcontributed 0.1 and 0.2 percentage points tothe quarterly and annual movements in theoverall CPI inflation, respectively.

The CPI for the 'Housing' expenditure groupincreased by 1.5 percent in the June quarterof 2020, compared to a decline of 0.2 percentin the previous quarter. The price increases inthe 'rent', and 'electricity' sub-groups of 7.5percent and 0.7 percent, respectively, morethan offset a decline in the 'housingmaintenance' sub-group of 6.7 percent. Theprice in the 'water' sub-group showed nochanges. This expenditure group contributed0.2 percentage points to both the quarterlyand annual movements in the overall CPIinflation.

The CPI for the 'Food and Non-AlcoholicBeverages' expenditure group increased by0.8 percent in the June quarter of 2020,compared to an increase of 0.9 percent in theprevious quarter. There were increases in the'fruits & vegetables', 'fish', 'meat' and 'non-alcoholic beverages' sub-groups of 3.7percent, 1.5 percent, 1.1 percent, and 0.6percent, respectively. These more than offsetdeclines in the 'dairy products, eggs, cheese','oils and fats', 'other food products', 'sugarsand confectionery', and 'cereals' sub-groupsof 2.0 percent, 1.7 percent, 1.1 percent, 0.6percent and 0.4 percent, respectively. Thisexpenditure group contributed 0.2 and 0.9percentage points to the quarterly and annualmovements in the overall CPI inflation,respectively.

Prices in the 'Recreation' expenditure grouppicked up by 0.6 percent in the June quarter

17

2014 2015 2016 2017 2018 2019 2020

Headline Consumer Price Index(percentage change over the quarter)

3.5

0.5

2.5

1.5

of 2020, compared to a marginal decline of0.1 percent in the previous quarter. Thisreflected price increases for batteries, DVDplayer, bicycle, biros and newspaper of 7.8percent, 5.6 percent, 1.3 percent, 0.9 percentand 0.6 percent, respectively. These morethan offset declines in the prices of flash drives,digital camera, photography and television of3.8 percent, 2.8 percent, 0.2 percent and 0.1percent, respectively. This expendituregroup's contribution to the quarterly and annualoverall CPI inflation was negligible.

The CPI for the 'Clothing and Footwear'expenditure group increased by 0.2 percentin the June quarter of 2020, compared to anincrease of 1.1 percent in the March quarter.There were increases in the 'sewing items','men's wear', 'boys wear' and 'clothing' sub-groups of 3.0 percent, 1.9 percent, 0.5 percentand 0.1 percent, respectively. These morethan offset declines in the 'women and girlwear' and 'footwear' sub-groups of 0.9 percent,and 0.5 percent, respectively whilst the'headwear' sub-group recorded negligibleprice changes. This expenditure group'scontribution to the movement in the quarterlyCPI inflation was negligible, whilst it contributed0.1 percentage points to the annual CPIinflation.

The CPI for the 'Education' expenditure groupincreased marginally by 0.1 percent in theJune quarter of 2020, compared to an increaseof 5.2 percent in the March quarter. Thisreflected an increase in the 'other expenses'sub-group of 0.3 percent, while the 'educationfees' sub-group had no price changes. Thisexpenditure group's contribution to thequarterly movement in the overall CPI inflationwas negligible, whilst it contributed 0.3percentage points to the annual CPI inflation.

The CPI for the 'Household Equipment'expenditure group declined by 1.2 percent inthe June quarter of 2020, compared to anincrease of 0.4 percent in the previous quarter.This was attributed to declines in the'household furniture and furnishings','household maintenance goods', and'household appliances' sub-groups of 2.7percent, 1.1 percent and 0.7 percent,respectively. This expenditure groupcontributed 0.1 percentage points in both thequarterly and annual movements to the overallCPI inflation.

The CPI for the 'Communication' expendituregroup declined by 1.2 percent in the Junequarter of 2020, compared to a decline of 0.5percent in the previous quarter. There weredeclines in the 'telephone services', and 'postalservices' sub-groups of 2.3 percent and 0.7percent, respectively, which more than offsetan increase in the 'telephone equipment' sub-group of 0.5 percent. The 'other services' sub-group had no price changes. This expendituregroup's contribution to the overall movementin quarterly CPI inflation was negligible, whilstit contributed 0.1 percentage points to theannual CPI inflation.

Prices in the 'Miscellaneous' expenditure

18

group fell by 1.2 percent in the June quarter of2020, compared to a decline of 0.5 percent inthe previous quarter. This was attributed todeclines in the prices of children's toys, babyoil and powder, toiletries and personal careproducts, and insect repellents of 6.6 percent,4.0 percent, 1.6 percent and 0.8 percent,respectively. These more than offset a priceincrease in barber fees of 1.5 percent. Thisexpenditure group's contribution to the overallquarterly and annual CPI inflation wasnegligible.

Prices in Port Moresby increased by 7.6percent in the June quarter of 2020, comparedto an increase of 0.6 percent in the previousquarter. This outcome mainly reflected theimpact of the COVID-19 pandemic. The'Alcoholic Beverages, Tobacco and Betelnut'expenditure group recorded the largestincrease of 34.5 percent, followed by'Transport' with 10.3 percent, 'Housing' with4.6 percent, 'Health' with 3.6 percent,'Restaurants and Hotels' with 3.1 percent,'Household Equipment' with 2.6 percent, andthe 'Clothing and Footwear' with 2.1 percent.The 'Education' and 'Food and Non-AlcoholicBeverages' expenditure groups also recordedmarginal increases. These more than offsetdeclines in the 'Miscel laneous','Communication' and 'Recreation' expendituregroups of 1.6 percent, 1.2 percent, and 0.1percent, respectively. Port Moresbycontributed 2.6 and 3.4 percentage points tothe overall movement in the quarterly andannual CPI inflation, respectively.

In Lae, prices increased by 3.2 percent in theJune quarter of 2020, from an increase of 1.1percent in the previous quarter. The 'AlcoholicBeverages Tobacco and Betelnut'expenditure group recorded the largestincrease of 8.5 percent, followed by 'Health'

with 7.6 percent, 'Clothing and Footwear' with6.0 percent, 'Restaurants and Hotels' with 3.3percent, both 'Transport' and 'Food and Non-Alcoholic Beverages' with 2.0 percent eachand 'Housing' with 0.5 percent. These morethan offset declines in the 'Communication','Household Equipment', 'Recreation','Miscellaneous', and 'Education' expendituregroups of 3.1 percent, 1.8 percent, 1.5 percent,0.9 percent and 0.3 percent, respectively.Lae contributed 0.6 and 1.0 percentage pointsto the overall movement in the quarterly andannual CPI inflation, respectively.

In Goroka/Mt. Hagen/Madang, pricesincreased by 1.4 percent in the June quarterof 2020, compared to an increase of 1.5percent in the previous quarter. The 'AlcoholicBeverages, Tobacco and Betelnut'expenditure group recorded the largestincrease of 7.7 percent, followed by'Recreation' with 2.5 percent, both'Restaurants and Hotels' and 'Transport' with2.2 percent, 'Health' with 1.2 percent,'Household Equipment' with 0.2 percent and'Food and Non-Alcoholic Beverages' with 0.1percent. These more than offset declines inthe 'Communication', 'Miscellaneous','Housing' and 'Clothing and Footwear'expenditure groups of 2.1 percent, 1.8 percent,1.7 percent and 1.1 percent, respectively.The 'Education' expenditure groups pricechange was negligible. Goroka/Mt. Hagen/Madang contributed 0.4 percentage pointsand 1.2 percentage points to the quarterlyand annual movement in the overall CPIinflation, respectively.

In Alotau/Kimbe-Kokopo/Rabaul, pricesincreased by 1.0 percent in the June quarterof 2020, compared to an increase of 1.1percent in the previous quarter. The 'Health'expenditure group recorded the largest

19

increase with 13.7 percent, followed by'Alcoholic Beverages, Tobacco and Betelnut'with 4.9 percent, 'Restaurants and Hotels'with 3.4 percent, 'Communication' with 2.8percent, 'Transport' with 1.8 percent,'Recreation' with 1.5 percent and 'Food andNon-Alcoholic Beverages' with 1.0 percent.These more than offset declines in the,'Clothing and Footwear', 'Housing', 'HouseholdEquipment', and 'Miscellaneous', expendituregroups of 4.0 percent, 3.7 percent, 3.6 percent,and 0.6 percent, respectively. The 'Education'expenditure group showed negligible pricechanges. Alotau/Kimbe-Kokopo/Rabaulcontributed 0.2 percentage points and 0.6percentage points to the quarterly and annualmovement in the overall CPI inflation,respectively.

The annual headline inflation was 6.0 percentin the June quarter of 2020, compared to 3.1percent in the March quarter. All expendituregroups recorded increases except for the'Communication', 'Household Equipment' and'Miscellaneous' expenditure groups. Thelargest increase was in the 'AlcoholicBeverages, Tobacco and Betelnut'expenditure group with 19.4 percent, followedby 'Transport' with 8.4 percent, 'Health' with7.2 percent, 'Restaurants and Hotel' with 6.2percent, 'Education' with 5.1 percent, 'Foodand Non-alcoholic Beverages' with 2.9percent, 'Clothing and Footwear' with 2.1percent, 'Recreation' with 2.0 percent and'Housing' with 1.5 percent. These more thanoffset declines in the 'Communication','Household Equipment' and 'Miscellaneous'expenditure groups of 1.8 percent, 1.5 percentand 0.8 percent, respectively.

The NSO's quarterly exclusion-based inflationmeasure (which is the overall CPI excludingseasonal, customs excise and price regulated

items) fell by 0.1 percent in the June quarter of2020, compared to an increase of 1.7 percentin the previous quarter. Annual exclusion-based inflation was 2.1 percent in the Junequarter of 2020, compared to 1.8 percent inthe March quarter.

The quarterly trimmed mean inflation measurepublished by the Bank of PNG increased by0.8 percent in the June quarter of 2020,compared to an increase of 0.9 percent in theprevious quarter. The annual trimmed meaninflation was 2.8 percent in the quarter,compared to 2.5 percent in the same period in2019.

4. EXPORT COMMODITIES REVIEW

The total value of merchandise exports wasK7,427.3 million in the June quarter of 2020,compared to K9,889.6 mill ion in thecorresponding quarter of 2019. There werelower export receipts for all major exportcommodities, except palm oil and other exportcommodities.

The value of agricultural, marine products andother non-mineral exports, excluding forestryand refined petroleum product exports, wasK687.6 million, accounting for 9.3 percent oftotal merchandise exports in the June quarterof 2020, compared to K895.3 million or 9.1percent of total merchandise exports in thecorresponding quarter of 2019. Forestryproduct exports were K222.9 million, whichaccounted for 3.0 percent of total merchandiseexports in the June quarter, compared toK245.7 million or 2.5 percent in thecorresponding quarter of 2019. Refinedpetroleum product exports were K213.1million and accounted for 2.9 percent of total

20

merchandise exports in the June quarter,compared to K390.4 million or 3.9 percent inthe corresponding quarter of 2019. Mineralexport receipts, including LNG andcondensate were K6,303.4 million andaccounted for 84.5 percent of totalmerchandise exports in the June quarter,compared to K8,358.1 million or 84.9 percentin the corresponding quarter of 2019.

The weighted average kina price of PNG'sexports, excluding LNG, decreased by 5.0percent in the June quarter of 2020, comparedto the corresponding quarter of 2019. Theweighted average kina price of mineral exportswas 0.1 percent higher, reflecting higher kinaprices for all mineral commodities. Foragricultural, logs and marine product exports,the weighted average kina price decreasedby 22.8 percent, due to lower kina prices forcopra oil, rubber, logs and marine products.Excluding logs, the weighted average kinaprice of agricultural and marine product exportsdecreased by 27.7 percent in the June quarterof 2020, compared to the correspondingquarter of 2019. Lower international pricesaccounted for the decline.

MINERAL EXPORTS

The total value of mineral exports was K6,303.4million in the June quarter of 2020, comparedto K8,358.1 million in the correspondingquarter of 2019. The decline was due to lowervalue and volume of all mineral exportcommodities except for crude oil volumes.

The value of LNG export was K2,679.8 millionin the June quarter of 2020, compared toK3,432.5 million in the corresponding quarterof 2019. The decline was due to lower LNGprices, attributed to higher supply in the worldmarket.

The volume of condensate exported was2,082.0 thousand barrels in the June quarterof 2020, compared to 2,376.0 thousandbarrels in the corresponding quarter of 2019.There was lower production by the PNG LNGproject. The average free on board (f.o.b)price for condensate export was K88 perbarrel in the June quarter, compared to K229per barrel in the corresponding quarter of2019, reflecting lower global demand due tothe impact of the COVID-19 pandemic. Thecombined decline in export volume and price,resulted in a lower export receipt of K182.6million in the June quarter, compared toK544.8 million in the corresponding quarter of2019.

The volume of gold exported was 14.2 tonnesin the June quarter, compared to 20.7 tonnesin the corresponding quarter of 2019. Thedecline reflected lower production and exportfrom the Ok Tedi, Porgera, Lihir, Hidden Valley,and Simberi mines. The alluvial gold exportsalso declined. The average free on board(f.o.b.) price received for Papua New Guinea'sgold exports was K177.1 million per tonne inthe June quarter, compared to K135.7 millionper tonne in the corresponding quarter of2019. This reflected higher international pricesas well as the depreciation of the kina againstthe US dollar. The average gold price at theLondon Metal Exchange increased by 30.7percent to US$1,708.0 per fine ounce in theJune quarter, compared to the correspondingquarter of 2019. The increase was due tostrong demand for gold as a safe-haveninvestment, attributed to weak economic data,global uncertainty due to the COVID-19pandemic, and depreciation of the US dollaragainst major currencies. The decline in exportvolume which more than offset the increase inthe export price, resulted in a lower exportreceipt of K2,515.1 million in the June quarter,

21

EXPORT COMMODITY PRICES London Metal Exchange Prices (US$’000)

2014 2015 2016 2017 2018 2019 2020.015

Coffee and Cocoa - K’000 per tonne, f.o.b

7.5

Copra and Palm Oil - K’000 per tonne, f.o.b

2.0

1.0

0.0

Logs - Kina per cubic metre, f.o.b

10.0

2014 2015 2016 2017 2018 2019 2020

2014 2015 2016 2017 2018 2019 2020

2014 2015 2016 2017 2018 2019 2020

0.50

0.03

1.25

0.04

300

3.0

4.0

1.75

12.5

0.75

1.00

1.50

240

180

360

5.0

Gold US/oz (left scale)

Copper US/lb (right scale)

coffee

cocoa

palm oil

copra

compared to K2,809.9 million in thecorresponding quarter of 2019.

The volume of copper exported was 19.3thousand tonnes in the June quarter, comparedto 32.9 thousand tonnes in the same quarterof 2019. The decline was due to lowerproduction of metal ore grades and shipmentby the Ok Tedi mine. The average f.o.b. priceof PNG's copper exports was K17,720 pertonne in the June quarter, compared toK20,316 per tonne in the correspondingquarter of 2019. The lower price was mainlydue to a weaker demand from China, reflectinga slowdown in economic activity as theoutbreak of the COVID-19 pandemic continueto affect global demand. The decline in exportvolume and price, resulted in a lower exportreceipt of K342.0 million in the June quarter,compared to K668.4 million in the same quarterof 2019.

The volume of nickel exported was 7.6thousand tonnes in the June quarter, comparedto 9.5 thousand tonnes in the correspondingquarter of 2019. The decline was due to lowerproduction and shipment by the Ramu Nickel/Cobalt mine. The average f.o.b. price of PNG'snickel exports was K34,145 per tonne in theJune quarter, compared to K41,011 per tonnein the corresponding quarter of 2019. Thedecline was due to lower demand, mainlyfrom China, especially from its stainless steelsector impacted by the COVID-19 outbreak.The decline in the export volume and price,resulted in a lower export receipt of K259.5million in the quarter, compared to K389.6million in the corresponding quarter of 2019.

The volume of cobalt exports was 0.6 thousandtonnes in the June quarter, compared to 0.9thousand tonnes in the corresponding quarterof 2019. The decline was due to lower

22

production and shipment by the Ramu Nickel/Cobalt mine. The average f.o.b. price of PNG'scobalt exports was K79,000 per tonne in theJune quarter, compared to K99,333 per tonnein the same quarter of 2019. The decline inprice was due to lower global demand, mainlyfrom China reflecting the impact of the COVID-19 outbreak, combined with excess supplyfrom the Democratic Republic of Congo, theworld's top producer. The decline in the exportvolume and price, resulted in a lower exportreceipt of K47.4 million in the June quarter,compared to K89.4 mil l ion in thecorresponding quarter of 2019.

The volume of crude oil exported was 1,272.3thousand barrels in the June quarter, comparedto 1,124.9 thousand barrels in the samequarter of 2019. This was due to higherproduction from the Kutubu and Moran oilfields, reflecting improvement in the mainprocessing facility affected by the 2018 earthquake. The average export price of crude oilwas K88 per barrel in the quarter, comparedto K225 per barrel in the June quarter of 2019.The lower price reflected higher production byboth the OPEC and non-OPEC countries,coupled with weaker global demand attributedto the COVID-19 pandemic. The decline inexport price more than offset the increase inexport volume, resulting in an export receipt ofK111.8 million in the quarter, compared toK253.2 million in the June quarter of 2019.

Export receipts of refined petroleum products,which include Naphtha from the PNG LNGproject, were K213.1 million in the June quarter,compared to K390.4 mil l ion in thecorresponding quarter of 2019. The declinewas due to lower export volumes for variousrefined petroleum products from the NapaNapa oil refinery, reflecting weak globaldemand due to the COVID-19 pandemic which

disrupted activities in the transportation andlogistics industry.

AGRICULTURE, LOGS AND FISHERIESEXPORTS

Export prices of copra oil, rubber, logs andmarine products declined, while cocoa, coffee,copra, and palm oil increased in the Junequarter of 2020, compared to thecorresponding quarter of 2019. The exportprice of tea recorded no change. The neteffect was a 5.0 percent decline in theweighted average kina price of agricultural,logs and marine product exports. Excludinglogs, the weighted average kina price ofagricultural and marine product exportsdeclined by 4.9 percent in the June quarter,compared to the corresponding quarter of2019.

The export volume of coffee was 7.1 thousandtonnes in the June quarter, compared to 11.0thousand tonnes in the corresponding quarterof 2019. The decline was due to lowershipment, reflecting the impact of the COVID-19 pandemic on global supply chains. Theaverage export price of coffee was K9,887per tonne, an increase of 16.7 percent fromthe June quarter of 2019.The increasestemmed from higher international prices asa result of lower production from the topproducers, Vietnam and Colombia.Thedecline in export volume more than offset theincrease in export price, resulting in an exportreceipt of K70.2 million in the June quarter, adecline of 24.7 percent from the correspondingquarter of 2019.

The export volume of cocoa was 1.8 thousandtonnes in the June quarter, compared to 7.8thousand tonnes in the corresponding quarterof 2019. The decline was attributed to lower

23

shipments from the major growing regions,reflecting the impact of the COVID-19pandemic on global supply chains. Theaverage export price of cocoa was K8,333per tonne in the June quarter, an increase of3.0 percent from the corresponding quarter of2019. The outcome reflected lower productionfrom the top producers, Ivory Coast and Ghana,attributed to unfavourable wet weatherconditions and the COVID-19 outbreak. Thedecline in export volume more than offset theincrease in export price, resulting in an exportreceipt of K15.0 million in the June quarter, adecline of 76.2 percent from the correspondingquarter of 2019.

The export volume of copra was 4.9 thousandtonnes in the June quarter, compared to 5.8thousand tonnes in the corresponding quarterof 2019. The decline was attributed to lowershipment, reflecting the impact of the COVID-19 pandemic on the global supply chains. Theaverage export price of copra was K2,408 pertonne in the June quarter, an increase of 2.7percent from the corresponding quarter of2019. This reflected higher international pricesdue to lower production from Indonesia, thePhilippines and India, attributed to lockdownsto contain the COVID-19 pandemic.Thedecline in the export volume more than offsetthe increase in export price and resulted in anexport receipt of K11.8 million in the Junequarter, a decline of 13.2 percent from thecorresponding quarter of 2019.

The volume of copra oil exported was 1.6thousand tonnes in the June quarter, comparedto 3.7 thousand tonnes in the correspondingquarter of 2019. The decline was attributed tolower a shipment, reflecting the impact of theCOVID-19 pandemic on global supply chains.The average export price of copra oil wasK2,250 per tonne in the June quarter, a decline

of 6.4 percent from the corresponding quarterof 2019. The outcome reflected lower globaldemand, mainly due to the downturn ineconomic activity in major importing countriesamidst prolonged lockdowns to contain theCOVID-19 pandemic. The combined declinein the export price and volume resulted in alower export receipt of K3.6 million in the Junequarter, a decline of 59.6 percent from thecorresponding quarter of 2019.

The export volume of palm oil was 176.2thousand tonnes in the June quarter, comparedto 141.0 thousand tonnes in the correspondingquarter of 2019. The increase was due to ahigher shipment of carry-over of stock piles bysome companies, combined with the inclusionof a new exporter. The average export price ofpalm oil was K2,064 per tonne in the Junequarter, an increase of 19.4 percent from thesame quarter of 2019. This reflected lowerproduction from Indonesia and Malaysia,combined with higher demand from theEuropean Union. The combined increase inthe export price and volume resulted in anexport receipt of K363.6 million in the Junequarter, an increase of 49.2 percent from thecorresponding quarter of 2019.

There were no exports of tea in the Junequarter, compared to 0.1 thousand tonnes inthe June quarter of 2019. This was due torestriction of workers and disruptions to supplychains attributed to the COVID-19 pandemic.As a result, there was no average tradingexport price of tea in the quarter.

The export volume of rubber was 0.6 thousandtonnes in the June quarter, compared to 0.9thousand tonnes in the corresponding quarterof 2019. The decline was attributed to theproduction and shipment from a rubberproducer, reflecting supply chain disruptions

24

due to the COVID-19 pandemic. The averageexport price of rubber was K3,333 per tonnein the June quarter, a decline of 23.1 percentfrom the corresponding quarter of 2019. Thisoutcome reflected a weaker global demandas major tyre manufacturers around the worldwere forced to halt production to contain thespread of the COVID-19 pandemic.Thecombined decline in the export volume andprice resulted in an export receipt of K2.0million in the June quarter, a decline of 48.7percent from the corresponding quarter of2019.

The export volume of logs was 733.0 thousandcubic meters in the June quarter, compared to753.0 thousand cubic meters in thecorresponding quarter of 2019. There waslower production and shipment of logsattributed to disruptions in the global supplychains amid the COVID-19 pandemic. Theaverage export price of logs was K296 percubic meter in the June quarter, a decline of6.9 percent from the corresponding quarter of2019. The outcome was mainly due to aweaker global demand, attributed to theCOVID-19 pandemic. The decline in the exportvolume and price resulted in an export receiptof K217.1 million in the June quarter, a declineof 9.4 percent from the corresponding quarterof 2019.

The value of marine products exported wasK86.5 million in the June quarter, comparedto K385.9 million in the corresponding quarterof 2019. The significant decline in the exportvolume and export price resulted in a sharpfall in export receipts.

5. BALANCE OF PAYMENTS

SIX MONTHS TO JUNE 2020 ON SIXMONTHS TO JUNE 2019

The balance of payments recorded an overallsurplus of K43 million for the first six months of2020, compared to a deficit of K388 million inthe corresponding period of 2019. A surplusin the current account more than offset a deficitin the capital and financial account.

The surplus in the current account was due toa trade surplus and higher net transfer receipts,combined with lower net service and incomepayments.

The deficit in the capital and financial accountwas attributed to net outflows from direct andother investments reflecting related partytransactions and build-up in offshore foreigncurrency account balances of mineralcompanies, respectively, including thoseal lowed under the various ProjectDevelopment Agreements (PDAs). The netGovernment and private sector loanrepayments also contributed to the outflows.

The trade account recorded a surplus ofK10,942.7 million for the first six months of2020, compared to the surplus of K11,821.3million in the corresponding period of 2019.The surplus was driven by mineral exports,combined with a decline in merchandiseimports as a result of the COVID-19 pandemic.

The value of merchandise exports wasK16,150.5 million in the first six months of2020, compared to K18,831.2 million in thecorresponding period of 2019. The declinewas attributed to lower export values of allexport commodities, except for palm oil andother non-mineral exports which increased.

25

combined with lower transfer payments.

As a result of the developments in the trade,services, income and transfers accounts, thecurrent account recorded a surplus ofK8,845.6 million in the first six months of2020, compared to a surplus of K8,494.4million in the corresponding period of 2019.

The surplus in the capital account was K6.3million in the first six months of 2020,compared to a surplus of K7.5 million in thecorresponding period of 2019, reflecting lowertransfers by donor agencies for projectfinancing.

The deficit in the financial account wasK8,811.5 million in the first six months of2020, compared to a deficit of K8,886.6million in the corresponding period of 2019.The outcome was due to net outflows fromdirect and other investments reflecting relatedparty transactions and build-up in offshoreforeign currency account balances of mineralcompanies, respectively. The net Governmentand private sector loan repayments alsocontributed to the outflow.

JUNE QUARTER 2020 ON JUNEQUARTER 2019

The balance of payments recorded an overallsurplus of K981 million in the June quarter of2020, compared to a surplus of K120 millionin the corresponding quarter of 2019. A surplusin the current account more than offset adeficit in the capital and financial account.

The value of merchandise imports wasK2,361.3 million in the June quarter, comparedto K3,424.8 million in the correspondingquarter of 2019. There were lower general,mining and petroleum imports. The value of

The value of merchandise imports wasK5,207.8 million in the first six months of2020, compared to K7,019.9 million in thecorresponding period of 2019. There weredecreases in general, mining and petroleumimports. The value of general imports wasK3,161.2 million in the period, compared toK3839.2 million in the corresponding periodof 2019, reflecting the compression of importsdue to the COVID-19 pandemic. The value ofpetroleum sector imports was K236.5 millionin the period, compared to K1,073.9 million inthe corresponding period of 2019. Thisreflected lower expenditure on explorationand drilling activities by a resident petroleumcompany. The mining sector imports wasK1,810.1 million in the period, compared toK2,116.8 million in the corresponding periodof 2019. The decline was due to lower capitalexpenditure by the Ok Tedi, Porgera, Lihir,Hidden Valley, Simberi, Ramu Nickel/ Cobaltand Porgera mines.

The deficit in the services account wasK1,882.0 million in the first six months of2020, compared to a deficit of K2,167.0million in the corresponding period of 2019.The lower outcome was due to lower paymentsfor all services, reflecting the impact of theCOVID-19 pandemic.

The deficit in the income account was K749.0million in the first six months of 2020, comparedto K1,684.6 million in the correspondingperiod of 2019. This outcome was mainly dueto lower payments for interest, dividends andcompensation of employees.

The surplus in the transfers account wasK534.0 million in the first six months of 2020,compared to a surplus of K524.7 million in thecorresponding period of 2019. The outcomewas mainly due to higher tax receipts,

26

2014 2015 2016 2017 2018 2019 2020

1.2

0.0

2014 2015 2016 2017 2018 2019 2020

2014 2015 2016 2 017 2018 2019 2020

2014 2015 2016 2017 2018 2019 2020

-1.2

0.0

2.0

4.0

Balance on Merchandise Trade (K’000 millions)

0.0

Balance of Current Account (K’000 millions)

Balance of Financial and Capital Account (K’000 millions)

-2.0

0.0

-1.2

2.4

4.0

-2.4

-3.6-4.8

1.2

2.0

6.0

-6.0

BALANCE OF PAYMENTS Overall Change in Reserves (K'000 millions)

8.0

1.8

6.0

-7.2

0.6

-0.6

8.0

general imports was K1,399.6 million in theJune quarter, compared to K2,105.8 million inthe corresponding quarter of 2019, reflectingthe impact of the COVID-19 pandemic on theglobal supply chains. The value of petroleumsector imports was K58.9 million in the Junequarter, compared to K217.2 million in thecorresponding quarter of 2019. This reflectedlower expenditure on exploration and drillingactivities by a petroleum company. Miningsector imports was K902.8 million in thequarter, compared to K1,101.8 million in theJune quarter of 2019. The decline was due tolower capital expenditure by the Lihir, Ok Tedi,Simberi and Hidden Valley mines reflectingthe impact of the COVID-19 pandemic. Theclosure of the Porgera mine due to the expiryof its special mining lease also contributed tothe lower outcome.

The deficit in the services account was K808million in the quarter, compared to a deficit ofK1,155 million in the June quarter of 2019.This was due to lower payments for all services,except for cultural and reconciliation services.

The deficit in the income account was K181million in the June quarter, compared toK1,275 million in the corresponding quarter of2019. The outcome was mainly due to lowerpayments for compensation of employees,interest and dividends.

The surplus in the transfers account was K303million in the quarter, compared to a surplus ofK248 million in the June quarter of 2019. Theoutcome was mainly due to higher tax receipts,combined with lower transfer payments.

As a result of the developments in the trade,services, income and transfers accounts, thecurrent account recorded a surplus of K4,380million in the June quarter, compared to a

27

surplus of K4,283 million in the correspondingquarter of 2019.

The capital account recorded a net inflow ofK2.0 million in the June quarter of 2020,compared to a net inflow of K3.0 million in thecorresponding quarter of2019, reflecting alower transfer by donor agencies for projectfinancing.

The deficit in the financial account was K3,404million in the quarter, compared to a deficit ofK4,165 million in the June quarter of 2019.The outcome was due to net outflows fromdirect and other investments reflecting relatedparty transactions and build-up in offshoreforeign currency account balances of mineralcompanies, respectively. The net repaymentsof Government and private sector loans alsocontributed to the outflows.

As a result of these developments, the capitaland financial account recorded a deficit ofK3,401 million in the June quarter, comparedto a deficit of K4,162 mill ion in thecorresponding quarter of 2019.

The level of gross foreign exchange reservesat the end of June 2020 was K7,854.2 (US$2,309.1) million, sufficient for 5.4 months oftotal and 9.1 months of non-mineral importcovers.

6. MONETARY DEVELOPMENTS

INTEREST RATES AND LIQUIDITY

The Central Bank, maintained a neutral stanceof monetary policy during the June quarter of2020. The monthly policy rate, the KFR waskept unchanged at 3.00 percent, after beingreduced from 5.00 percent in the first quarter

of the year to counter the adverse effects ofthe COVID-19 pandemic on the economy.Although monetary and liquidity conditionsremained conducive for lending, demand forloans has been low due to high cost ofborrowing and down turn in the economy. Thedealing margin for the Repo Facility remainedat 100 basis points on both sides of the KFR.

Interest rates on domestic securities generallydeclined at the lower end of the maturitystructure, while movement was mixed at theupper end, over the June quarter of 2020. TheCentral Bank Bills (CBBs) weighted averageinterest rates for the 28-day, 63-day and 91-day terms decreased by 0.01 percent, 0.04percent and 0.04 percent to 1.38 percent,2.23 percent and 2.44 percent, respectively.The Government continued to issue Treasurybills at the upper end of the maturity structure.In the June quarter of 2020, the weightedaverage rate for the 273-day term remainedat 6.04 percent, 182-day rate decreased by0.01 percent to 4.68 percent, and the 364-dayterm increased by 0.08 percent to 7.20percent.

The weighted average interest rates onwholesale deposits (K500,000 and above)offered by commercial banks decreasedduring the quarter. The rates for the 30-day,60-day, 90-day, 180-day, 270-day and 360-day terms decreased to 0.42 percent, 2.36percent, 0.75 percent, 0.80 percent, 0.75percent and 1.41 percent, respectively. Boththe weighted average interest rate on totaldeposits and loans increased at the end ofJune 2020, compared to March 2020. Theweighted average interest rate on totaldeposits increased to 0.91 percent in theJune quarter from 0.84 percent in the Marchquarter, while the weighted average interestrate on total loans increased to 7.82 percent

28

Liquid Asset Ratio(percentage of deposits)

20

30

40

60

Weighted Ave. Lending and Deposit Rates(percentage per annum)

2014 2015 2016 2017 2018 2019 20200

4

8

12

2014 2015 2016 2017 2018 2019 2020

2014 2015 2016 2017 2018 2019 2020

Commercial Bank Deposit(% change over the year)

Commercial Bank Lending(% change of 8 week moving average)

20

0

0

10

20

2014 2015 2016 2017 2018 2019 20200

10

50

10

-10

-10

2

10

6

Actual Liquid Assets Ratio

`

Lending Rate

Deposit Rate

from 7.46 percent, causing the interest ratespread to increase by 0.29 percent to 6.91percent, during the period. The commercialbanks' Indicator Lending Rate (ILR) wasbetween 10.10-11.70 percent during thequarter.

The Bank utilised its Open Market Operation(OMO) instruments in the conduct of monetarypolicy to manage liquidity. Liquidity in thebanking system remained high from theQuantitative Easing (QE) liquidity injection inthe March quarter, coupled with lower demandfor private sector lending. In the June quarter,there was a net retirement in CBBs of K441.5million to support the easing stance. On theother hand, the Government made a netissuance of K51.8 million and K1,733.8 millionin Treasury bills and Treasury bonds knownas COVID-Bonds, respectively. The CentralBank's intervention in the foreign exchangemarket also assisted in diffusing some of thekina liquidity during the period. The CRR forthe commercial banks remained at 7.00percent in the June quarter, after beingreduced from 10.0 percent in the previousquarter.

MONEY SUPPLY

The average level of broad money supply(M3*) slightly increased by 0.8 percent in theJune quarter of 2020, compared to anincrease of 2.4 percent in the March quarter.This outcome was due to increases in theaverage net foreign assets (NFA) and netdomestic assets (NDA) of the banking system.Average net domestic claims outstanding,excluding net claims on the CentralGovernment, increased by 0.7 percent in theJune quarter of 2020, following an increase of1.1 percent in the previous quarter.Thisreflected an increase in average net claims

29

Change in Domestic Claims (Excl. Central Gov’t)(K’000 million)

Change in Net Claims to Government

Change in Net Foreign Assets

1.8

0.0

(K’000 million)

0.0

(K’000 million)

2014 2015 2016 2017 2018 2019 2020

2014 2015 2016 2017 2018 201 9 2020

2014 2015 2016 2017 2018 2019 2020

0.6

Change in Total Money Supply(K’000 million)

-1.2

-0.6

-1.2

-0.6

2014 2015 2016 2017 2018 2019 2020

-0.6

1.2

1.2

0.6

-1.2

0.0

-1.2

0.0

1.8

1.2

-1.8

1.2

1.8

0.6

-0.6

on the private sector, which more than offsetdecreases in public non-financial corporationsand other financial corporations (OFCs).

The average level of monetary base (reservemoney) increased by 0.3 percent during theJune quarter of 2020, compared to a declineof 1.1 percent in the previous quarter. Thisreflected an increase in the average level ofcommercial bank deposits held at the CentralBank, which more than offset a decline incurrency in circulation.

The average level of narrow money supply(M1*) increased marginally in the June quarterof 2020, following an increase of 4.0 percentin the March quarter of 2020. This was due toan increase in the average level of currencyoutside of the depository corporations (DCs),which more than offset a decline in the averagelevel of transferable deposits of DCs. Theaverage level of quasi money increased by3.3 percent in the June quarter of 2020,compared to a decline of 2.3 percent in theprevious quarter.

The average level of deposits in otherdepository corporations (ODCs) increasedto K23,572.1 million in the June quarter of2020, from K23,039.7 million in the previousquarter. The increase was due to higheraverage deposits of other resident sectors,public non-financial corporations State OwnedEnterprises (SOEs) and the Government.

The NFA of the Financial Corporations (FCs),comprising DCs and OFCs, increased by13.1 percent to K9,349.7 million in the Junequarter of 2020, compared to a decline of13.9 percent in the previous quarter.Thisreflected increases in NFA of the DCs (bothCentral Bank and ODCs) and OFCs. Theincrease in NFA of the Central Bank mainly

-1.8

0.6

30

reflected the drawdown of US$363.6 million(K1.2 billion) under the IMF's Rapid CreditFacility (RCF) for COVID-19 relief funding, aswell as an increase in the value of BPNG'sinvestments abroad due to revaluation gainsfollowing the depreciation of the kina. Theincrease in NFA of both the ODCs and OFCswas due to an increase in their foreign assetsreflecting investments abroad.

Net claims on the Central Government by FCsdeclined by 1.5 percent to K13,620.1 millionin the June quarter of 2020, following anincrease of 3.7 percent in the previous quarter.This resulted from a net retirement ofGovernment securities and an increase inGovernment deposits partly reflecting thedrawn down from the IMF's RCF.

LENDING

In the June quarter of 2020, total domesticcredit extended by FCs to the private sector,public non-financial corporations and'Provincial and Local Level Governments'declined by 0.8 percent to K18,057.2 million,compared to an increase of 1.3 percent in theprevious quarter. This reflected a decline ofK175.5 million in claims by public non-financialcorporations, which more than offset anincrease of K23.4 million in credit to the privatesector. The decline in the public non-financialcorporations reflected repayments by theSOEs, while the increase in credit to theprivate sector by ODCs (mainly commercialbanks) reflected advances to the 'Real estate,Renting & Business Services', 'Transport andCommunication', 'Building & Construction','Electricity Gas & Water Supply' and'Wholesale Trade' sectors.

7. PUBLIC FINANCE

The fiscal operations of the NationalGovernment over the six months to June 2020show a deficit of K2,085.8 million, comparedto a deficit of K1,667.4 million in thecorresponding period of 2019. The significantlyhigher deficit reflected lower revenue receipts.

Total revenue and grants over the six monthsto June was K4,814.6 million, 17.1 percentlower than in the same period of 2019 andrepresents 42.4 percent of the revised 2020Budget. This reflected declines in mostrevenue items.

Total tax revenue was K4,550.5 million, 0.2percent lower than in the corresponding periodof 2019 and represents 47.2 percent of therevised Budget.

Direct tax receipts totalled K2,613.6 million,0.7 percent higher than in the same period of2019 and represents 46.4 percent of therevised budget.

Indirect tax revenue over the six months toJune 2020 totalled K1,936.9 million, 1.3percent lower than in the same period of 2019and represents 48.3 percent of the revisedBudget. This decline was due to lower exciseand import duties, and export tax.

Total non-tax revenue over the six months toJune 2020 was K264.1 million, significantlylower than in the corresponding period of2019, and represents 33.9 percent of therevised Budget. The decline was due to lowerdividend collection from State-owned entities

31

and mining and petroleum companies. Sincethe Public Money Management Regularization(PMMR) Act was declared illegal by the courts,there were no receipts for the second quarterof 2020. There were no foreign grantsrecorded over the six months to June 2020,compared to K831.4 million over the sameperiod in 2019.

Total expenditure for the six months to June2020 was K6,900.4 million, 7.7 percent lowerthan in the corresponding period of 2019, andrepresents 38.4 percent of the revised Budget.

Recurrent expenditure for the six months toJune 2020 was K5,548.1 million, 5.4 percenthigher than in the corresponding period of2020 and represents 47.4 percent of therevised Budget. There was an increase inprovincial government expenditures, whichwas related to transfers to provinces forCOVID-19 related expenses. National

departments, interest payments, and othergrants and expenditure all showed declines,compared to the same period in 2019. Giventhe Government's tight cash flow position inthe first half of 2020, spending was mainly onpriority expenditures such as personnelemoluments, goods and services and debtrepayments.

Total development expenditure for the sixmonths to June 2020 was K1,352.3 million,39.0 percent lower than in the correspondingperiod in 2019, and represents 21.5 percentof the revised Budget. The lower developmentspending was due to lower capital investmenton projects partly reflecting a decline inGovernment's counterpart funding on donorfunded projects. Most capital projects andprograms were delayed to the following yeardue to the adverse impact of COVID-19 onGovernment revenue.

32

FOR THE RECORD

MONTHLY KINA FACILITY RATE ANNOUNCEMENTS

The Central Bank introduced the Kina Facility Rate (KFR) in February 2001 as the official rate to indicate its stanceof monetary policy. The KFR is a monthly rate and any changes to it should translate to changes in market interestrates. Changes to the KFR is based on assessment of economic fundamentals consistent with the overall objectiveof monetary policy of price stability in the economy. From January 2015, the KFR announcements by the Bank were;

2017 02 October Maintained at 6.25%.

06 November Maintained at 6.25%. 04 December Maintained at 6.25 %.

2018 01 January Maintained at 6.25% 05 Febrary Maintained at 6.25% 05 March Maintained at 6.25%

02 April Maintained at 6.25% 01 May Maintained at 6.25% 04 June Maintained at 6.25%

02 July Maintained at 6.25% 06 August Maintained at 6.25%

03 September Maintained at 6.25%. 01 October Maintained at 6.25%. 05 November Maintained at 6.25%.

03 December Maintained at 6.25 %.

2019 07 January Maintained at 6.25% 04 Febrary Maintained at 6.25% 04 March Maintained at 6.25%

01 April Maintained at 6.25% 06 May Maintained at 6.25% 03 June Maintained at 6.25%

02 July Lowered to 6.00% 03 August Lowered to 5.50%.

02 September Maintained at 5.50% 07 October Maintained at 5.50%. 04 November Maintained at 5.50%.

02 December Lowered to 5.00%.

2020 06 January Maintained at 5.00% 03 February Maintained at 5.00% 02 March Maintained at 5.00%

07 April Lowered to 3.00% 05 May Maintained at 3.00% 02 June Maintained at 3.00%

For details of the KFR, see Table 6.3 (S34) of the QEB.KFR announcements prior to January 2012 are reported in various bulletins starting with the March 2001 QEB.

33

6See ‘For the Record’ on page 34 in the 2004 September QEB.

A statistical statement that systematically summarisesa country’s economic transactions with the rest of theworld, over a specific time period. It comprises theCurrent and Capital and Financial Accounts.

Total volume of money comprising narrow money (M1*)and quasi money in the economy at a point in time. See‘narrow’ and ‘quasi’ money.

A requirement imposed on commercial banks to holdcash as a percentage of total deposits and otherprescribed liabilities at all times.

Records all transactions that involves the receipts ortransfers of capital and acquisitions/disposal of non-produced, non-financial assets such as purchase ofproduction facilities, i.e. plants and machinery, etc.

The Bank of Papua New Guinea (BPNG) is the monetaryauthority in Papua New Guinea (PNG) that haslegislative power over the financial system and isresponsible for issuing currency, managing internationalreserves, undertakes transactions with the IMF andproviding credit to the commercial banks.

A monetary policy instrument of the Bank of PNG usedto manage liquidity in the banking system by eitherinjecting or defusing it in order to achieve a desired levelof interest rate.

The CBS is the balance sheet of the Central Bank,which contains data on all components of the monetarybase, comprising of currency in circulation and centralbank liabilities to ODCs and other sectors.

Records all foreign transactions that are not transfersof capital and cannot be repaid. This includes donations,gifts and grants, superannuation funds and licensingfees.

The survey is a consolidation of the CBS and theODCS, which contains data on all depositorycorporations’ liabilities in the national definition ofbroad money and data on depository corporations,assts that are claims on (i.e credit) other sectors of theeconomy, including the external sector.

Balance of Payments

GLOSSARY OF TERMS AND ACRONYMS

Broad Money Supply (M3*)

Cash Reserve Requirement (CRR)

Capital Account

Central Bank (CB)

Central Bank Bill (CBB)6

Central Bank Survey (CBS)

Current Transfers Account

Depository Corporations Survey (DCS)

34

Deposits include all claims on the Bank of PNG andODCs. These are further classified into transferableand other deposits. (I). Transferable deposits comprisesall deposits that are: a). Exchangeable on demand atpar and without penalty or restrictions; b). Directlyusable for making payments by cheque, draft directdebit/credit or other direct payment facilities. ii.) Otherdeposits comprise all claims, other than transferabledeposits. These include savings and term depositsand non transferable deposits in foreign currency.

Accounts of the commercial banks with the Bank ofPNG for settlement transactions with each other.

An underlying inflation measure which involves zeroweighting of volatile sub-groups or items such as fruit&vegetables, betelnut and prices that are largelydetermined by non-market (seasonal) forces, as wellas alcoholic drinks, cigarettes & tobacco, etc. See‘Underlying CPI’.

Records all transactions associated with changes ofownership of foreign financial assets such as holdingsof monetary gold, special drawing rights (SDR), claimson non-residents and foreign liabilities.

The FCS is the broadest set of monetary and financialstatistics in terms of institutional coverage. The surveycontains consolidated balance sheet data for allinstitutional units within the financial corporationssector, thereby providing the stock and flow data foranalyzing claims on and liabilities to all other sectorsof theeconomy, including the external sector.

A financial instrument linked to a specific financialinstrument, indicator or commodity and through whichspecific financial risks (such as interest rates, currencyequity and commodity price risk, credit risk, etc.) canbe traded in their own right in financial markets.

A measure of inflation as calculated and publishedquarterly by the National Statistical Office (NSO),which measures the total price movements in goodsand services in the basket.

Records transactions such as compensation ofemployees, which cover wages, salaries, and otherbenefits in cash and kind, dividends and interestearned on investments between PNG and the othercountries.

A Government debt instrument sold to the public for

Deposits

Exchange Settlement Account (ESA)

Exclusion-based CPI measure

Financial Account

Financial Corporations Survey (FCS)

Financial derivatives

Headline Consumer Price Index (CPI)

Income Account

Inscribed Stock (bond)

35

a maturity term of one year or longer for Budgetfinancing.

Comprises of (i) net equity of households in life insurancecorporations reserves, (ii) net equity of households insuperannuation (pension) funds and (iii) prepayment ofpremiums. This is the major liability item of thesuperannuation funds and insurance corporations. Onthe assets side, this category records prepaid insurancepremiums, which are relatively small amounts.

Official benchmark rate used by the Bank of PNG tosignal its monetary policy stance. The KFR isannounced monthly by the Governor and published inthe newspapers and on the Bank’s website.

Assets of the commercial banks, which are in nearliquid form, comprising cash, ESA balances, CBBs,Treasury bills and Inscribed stocks less than 3 yearsto maturity.

A prudential requirement imposed by the Bank of PNGon commercial banks to hold liquid assets as apercentage of total deposits and other prescribedliabilities at all times.

Comprised of currency held by the public and liquidassets of the commercial banks, including depositsheld with the Bank of PNG under the RepurchaseAgreement Facility (RAF) or Repos.

A component of total money supply that is consideredliquid or can be converted easily to cash on demand,and comprises of currency in circulation (held outsidethe banking system) and demand deposits.

Comprises of policyholders claims on the reserves ofinsurance corporations. These reserves must beultimately used to provide benefits to policyholders,upon the occurrence of other specified events, or tocompensate heirs upon the death of the policyholder.These claims constitute assets of the householdsector rather than of insurance corporations.

Comprises policyholders’ claims on pension funds.These reserves must be ultimately used to providebenefits to policyholders upon their retirement or tocompensate heirs upon death of the policyholder.Pension funds are considered assets of the householdsector rather than assets of the institutional units thatmanage the funds. Pension funds do not include socialsecurity funds, which are considered part of the general

Insurance Technical Reserves

Kina Facility Rate (KFR)

Liquid Assets

Minimum Liquid Asset Ratio (MLAR)

Monetary Base (or Reserve Money)

Narrow Money

Net Equity of Households in Life InsuranceReserves

Net Equity of Households in Pension Funds

36

government sector.

Operations of liquidity management conducted by theBank of PNG with commercial banks and other financialintermediaries involving Government securities, CBB,Repos and foreign exchange trading to influence short-term interest rates.

The ODC sub-sector in PNG comprises of the commercialbanks, finance companies, merchant banks, savingsand loans societies and microfinance companies.These financial corporations are mainly engaged infinancial intermediation and issue liabilities included inthe definition of broad.

The ODCS shows the consolidated stock and flowbalance sheet data for the institutional units coveredunder the ODC sub-sector.

The OFC sub-sector is made up of the insurancecorporations, superannuation (pension) funds, otherfinancial intermediaries and financial auxiliaries suchas insurance brokers, investment managers and fundadministrators.

The OFCS contains consolidated stock and flow balancesheet data for insurance corporations, superannuationfunds, other financial intermediaries and financialauxiliaries.

Percentage change in the CPI of a quarter compared tothe corresponding quarter of the previous year (Alsocalled ‘annual’ CPI).

Investments, mainly in equity and debt securities suchas bonds and notes, money market debt instrumentsand financial derivatives, as well as long-term debt,equity and securities.

These are current claims of policyholders rather thannet equity of insurance corporations. Prepayments ofpremiums, which are made by customers at thebeginning of the periods covered by their policies,generate reserves for insurance corporations. Suchprepayments are considered to be earned by aninsurance corporation on a prorated basis during thepolicy period. These reserves are assets of policyholders.Reserves against outstanding claims are funds setaside by insurance corporations to cover the amountsthat are not settled or claims that may be disputed.Reserves against such outstanding claims areconsidered to be assets of the beneficiaries and liabilities

Open Market Operations (OMO)

Other Depository Corporations (ODCs)

Other Depository Corporations Survey (ODCS)

Other Financial Corporations (OFCs)

Other Financial Corporations Survey (OFCS)

Over the year CPI

Portfolio Investment

Prepayment of Premiums and Reserves againstOutstanding Claims

37

of the insurance corporation. Policy benefits due toclaimants are considered assets of the claimants. Untilactually paid, these assets are held by insurancecorporations as reserves.

Public non-financial corporations are resident non-financial corporations and quasi–corporations controlledby government units. Control may be exercised throughownership of more than half the voting shares, legislation,decree, or regulation that establish specific corporatepolicy or all the government to appoint the directors. InPNG this would include those institutions that arecontrolled by the Independent Public BusinessCorporation (IPBC).

A component of total money supply that is not easilyconvertible to cash on demand and comprises of savingsand term deposits.

A money market instrument used by Bank of PNG tolend to or borrow from the commercial banks, forliquidity management, and is unwound on maturity. Theterms range from overnight to 14 days and can becollateralised, for instance, using Treasury bills.

These are negotiable instruments serving as evidencethat units have obligations to settle by means ofproviding cash, a financial instrument, or some otheritems of economic value. Common securities in PNGinclude treasury bills and inscribed stocks issued bythe Government and Central Bank Bills (CBBs) issuedby the Bank of PNG.

Shares and other equity comprises all instruments andrecords acknowledging, after claims of all creditorshave been met, claims on the residual value of acorporation. The components of shares and other equityinclude: (a). Funds contributed by owners; (b). Retainedearnings; (c). Current year profit and loss; (d). Generaland special reserve; and (e). Valuation adjustments.

A facility conducted by the Bank of PNG for sale ofTreasury bills and Inscribed stocks to the public.

A statutory mechanism stipulated under Section 54 ofthe Central Banking Act 2000, that provides the NationalGovernment with access to short-term financing tomeet mismatches in revenue.

Records all economic transactions associated withmerchandise exports and imports of physical goods.

Public non-financial corporations

Quasi Money

Repurchase Agreement Facility (RAF)

Securities other than Shares

Shares and Other equity

Tap Facility

Temporary Advance Facility

Trade Account

38

The Trade Weighted Index (TWI) measures the value ofthe kina against a basket of currencies of PNG’s majortrading partners.

Government security or debt instrument sold at adiscount value, but redeemed at face value on maturityor purposes of Budget financing. In PNG, Treasury billsare issued for 28, 61, 91, 182 and 364 day maturities.

A fixed proportion of prices at each end of the distributionof price changes are zero weighted and the mean of theremaining price changes recomputed. See also‘Underlying CPI’.

A measure of inflation that excludes short-term volatilemovements in prices, such as seasonal factors,Government policy decisions and price controlleditems.

7See ‘For the Record’ p.24 in the 2005 September QEB.

Trade Weighted Index7

Treasury Bill

Trimmed-mean CPI measure

Underlying CPI (exclusion-based andTrimmed-mean CPI measures)

39

REFERENCE “FOR THE RECORD”

Some issues of the Quarterly Economic Bulletin (QEB) have ‘For the Record’ as additional information relating tochanges introduced to various statistical tables. The following ‘For the Record’ have appeared in the QEB since June2003.

Issue For the Record

Jun 2003 - Changes to Open Market Operations Instruments- Directions of Merchandise Trade

Sep 2003 - Changes to the Treasury Bills Auction Allocation ProcessDec 2003 - Further Change to the Treasury Bills Auction Allocation Process

- Bank of PNG Employment SurveySep 2004 - Introduction of Central Bank Bill (CBB)Mar 2005 - Changes to Table 9.5 to include Exports from Napanapa Oil Refinery

- Changes to Tables 1.2 and 1.3 ‘Other Items (Net)’June 2005 - Changes to Tables 8.2 and 8.5 ‘External Public Debt’Sep 2005 - Trade Weighted Exchange Rate Index

- Employment Index - Changes to Tables 10.4 and 10.5- Central Bank Bill (CBB) Auction - Changes to Tables 3.8 and 7.2

Mar 2006 - Updated Weights for the Trade Weighted Index (TWI)June 2006 - Expansion of Monetary and Financial Data Coverage

- Upgrade of PNG’s Private Debt and Equity Recording SystemDec 2006 - Changes to Table 8.1 - Capital TransfersJun 2007 - Revisions to the March Quarter 2007 and December Quarter 2006 Consumer Price IndexJun 2007 - Debt RatiosSep 2007 - Revisions to the Consumer Price Indices in June Quarter 2007 back to September Quarter

2005.Mar 2008 - Updated Weights for the Trade Weighted Index (TWI)Mar 2009 - Changed Monetary Policy Statement   release month from January to MarchMar 2009 - Updated Weights for the Trade Weighted Index (TWI)Dec 2009 - New Tables; 8.7, 8.8, 8.9 and 8.10 were included in the December Quarterly Economic

Bulletin, resulting in subsequent renumbering of all other tables that follow.Dec 2009 - Revisions to Monetary and Financial Statistics tables in the December 2009 Quarterly

Economic Bulletin.Jun 2010 - Expansion of Monetary and Financial Data Coverage.Sep 2010 - Recalculation of months of import coverMar 2011 - Updated Weights of the Trade Weighted Trade (TWI)Mar 2013 - Updated Weights of the Trade Weighted Trade (TWI)Mar 2013 - Inclusion of Tables 4.16 and 4.17 for General Insurance CompaniesMar 2014 - Revised PNG Consumer Price Index BasketDec 2014 - Updated to tables 8.1, 8.2, 8.3 & 8.5 to include Ramu Nickel/CobaltDec 2014 - Inclusion of LNG & Condensate in tables 8.1, 8.2, 8.3 and 8.5Dec 2014 - Commencement of Nickel and Cobalt production in December quarter of 2012.

- PNG LNG Project commenced production and shipment in June quarter of 2014.- Updated Table 8.2: Exports Classified by Commodity Group- Updated Table 8.5: Non-Agricultural Exports – Quantities Exported of Major Commodities

Dec 2016 - Recalculation of import cover taking account of the service payments. - Inclusion of new GDP Actuals 2006-2013 tables 9.6 and 9.7

40

REFERENCE

Each issue of the Quarterly Economic Bulletin contains a review of economic conditions for the past quarter anda comprehensive set of updated statistical tables. Articles of special interest to current economic policy are alsoprepared by Bank staff for inclusion in the Bulletin. The following articles have appeared in the Quarterly EconomicBulletin since December 2005.

Issue Title

Jun 2007 Supplement to the July 2007 Monetary Policy StatementDec 2007 The 2008 National BudgetDec 2007 Semi-annual Monetary Policy Statement, January 2008Jun 2008 Papua New Guinea’s Total External ExposureJun 2008 Semi-annual Monetary Policy Statement, July 2008Dec 2008 The 2009 National BudgetDec 2008 Monetary Policy Statement, January 2009 UpdateMar 2009 Monetary Policy Statement, March 2009Jun 2009 Papua New Guinea’s Total External ExposureSep 2009 Monetary Policy Statement, September 2009Dec 2009 The 2010 National BudgetDec 2009 Monetary Policy Statement, March 2010Mar 2010 Papua New Guinea’s Total External ExposureSep 2010 Monetary Policy Statement, September 2010Dec 2010 The 2011National BudgetDec 2010 Monetary Policy Statement, March 2011Jun 2011 Papua New Guinea’s Total External ExposureSep 2011 Monetary Policy Statement, September 2011Dec 2011 The 2012 National BudgetDec 2011 Monetary Policy Statement, March 2012Mar 2012 Papua New Guinea’s Total External ExposureSep 2012 Monetary Policy Statement, September 2012Dec 2012 The 2013 National BudgetMar 2013 Papua New Guinea’s Total External ExposureSep 2013 Monetary Policy Statement, September 2013Mar 2014 Papua New Guinea’s Total External ExposureMar 2014 Monetary Policy Statement, March 2014Jun 2014 Monetary Policy Statement, September 2014Dec 2014 The 2015 National BudgetMar 2015 Papua New Guinea’s Total External ExposureDec 2015 The 2016 National BudgetMar 2016 Papua New Guinea’s Total External ExposureJun 2016 Monetary Policy Statement, September 2016Dec 2016 The 2017 National Budget

Monetary Policy Statement, March 2017Mar 2017 Papua New Guinea’s Total External ExposureSep 2017 Monetary Policy Statement, September 2017Dec 2017 Monetary Policy Statement, March 2018Mar 2018 Papua New Guinea’s Total External Exposure

The 2018 National BudgetMar 2019 Papua New Guinea’s Total External ExposureSep 2019 Monetary Policy Statement - March 2019

41

STATISTICAL SECTION

42

Sources

Statistics for the commercial banks have been derived from returns submitted to the Bank.Statistics on Savings and Loan Societies and Papua New Guinea Government securities arederived from sources within the Bank.

Government financial statistics are supplied by the Department of Finance and Treasury.

Information on prices of Papua New Guinea exports are gathered from marketing boards or exportproducers; world indicator prices are reproduced from the Public Ledger published in London. Teaprices are from the Tea Market Report, London. The general indices of commodity prices areconstructed from data published in The Economist, London.

Most other statistics are published initially by the National Statistical Office.

Symbols used

n.a not available.. figure less than half the digit shown- nile estimatef forecastp provisionalr revisedn.i.e not included elsewhere

S1

LIST OF TABLES

1.0 MONETARY AND CREDIT AGGREGATES1.1 Financial Corporations Survey S31.2 Monetary and Credit Aggregates: Movements S41.3 Depository Corporations Survey S51.4 Volume of Money: Determinants S61.5 Volume of Money: Components S7

2.0 BANK OF PAPUA NEW GUINEA2.1 Central Bank Survey S82.2 Liabilities S92.3 Assets S10

3.0 OTHER DEPOSITORY CORPORATIONS (ODCs)3.1 Other Depository Corporations Survey S113.2 Liabilities S123.3 Assets S133.4 Liquid Asset Holdings S143.5 Deposits Classified by Sector S15COMMERCIAL BANKS3.6 Liabilities S163.7 Assets S173.8 Deposits Classified by Depositor S183.9 Deposits Classified by Industry S193.10 Advances Outstanding Classified by Borrower S203.11 Selected Deposits and Advances Classified by Interest Rate S213.12 Movements in Lending Commitments S223.13 Liquid Assets S23FINANCE COMPANIES3.14 Liabilities S243.15 Assets S25MERCHANT BANKS3.16 Liabilities S263.17 Assets S27SAVINGS AND LOANS SOCIETIES3.18 Liabilities S283.19 Assets S29MICROFINANCE COMPANIES3.20 Liabilities S303.21 Assets S31

4.0 OTHER FINANCIAL CORPORATIONS4.1 Other Financial Corporations Survey S324.2 Liabilities S334.3 Assets S33SUPERANNUATION FUNDS4.4 Liabilities S344.5 Assets S34LIFE INSURANCE COMPANIES4.6 Liabilities S354.7 Assets S35INVESTMENT MANAGERS4.8 Liabilities S364.9 Assets S36FUND ADMINISTRATORS4.10 Liabilities S374.11 Assets S37

S2

NATIONAL DEVELOPMENT BANK4.12 Liabilities S384.13 Assets S38LIFE INSURANCE BROKERS4.14 Liabilities S394.15 Assets S39GENERAL INSURANCE COMPANIES4.16 Liabilities S404.17 Assets S40

5.0 COMMODITY INDUSTRY BOARDS AND STABILISATION FUNDS5.1 Deposits S415.2 Investments S41

6.0 INTEREST RATES AND SECURITY YIELDS6.1 Commercial Bank Interest Rates S426.2 ODCs Average Interest Rates (excl. commercial banks) S436.3 Other Domestic Interest Rates S446.4 Overseas Interest Rates S45

7.0 GOVERNMENT OPERATIONS7.1 Fiscal Operations of the Government S467.2 Mineral Resource Stabilisation Fund: Analysis of Movements S477.3 Public Debt Outstanding: Classified by Source S477.4 Domestic Debt Outstanding: Classified by Holder S487.5 Overseas Public Debt Outstanding: Analysis of Movements S48

8.0 BALANCE OF PAYMENTS AND INTERNATIONAL RESERVES8.1 Balance of Payments S498.2 Exports: Classified by Commodity Group S508.3 Agricultural and Other Exports: Classified by Commodity S508.4 Agricultural Exports: Quantities Exported of Commodities S518.5 Non-agricultural Exports: Quantities Exported of Major Commodities S518.6 Imports S528.7 Services Account S528.8 Income Account S538.9 Current Account Transfers Account S538.10 Net Foreign Assets of Depository Corporation S548.11 Exchange Rates S558.12 Export Prices: Non-mineral Commodities S568.13 International Commodity Prices: Major Exports S578.14 International Commodity Prices: Economists Price Indices S588.15 Export Price Indices S598.16 Export Volume Indices S608.17 Direction of Trade: Origins of Imports S618.18 Direction of Trade: Destinations of Exports S61

9.0 ECONOMIC ACTIVITY AND PRICES9.1 Prices and Wages S629.2 Consumer Price Index: Classified by Expenditure (New CPI Basket) S639.3 Consumer Price Index: Classified by Expenditure (New CPI Basket) S639.4 Employment Classified by Region S649.5 Employment Classified by Industry S659.6 Gross Domestic Product: 2006-2017 Current Prices S66

9.7 Gross Domestic Product: 2006-2017 Constant Prices S67