Governor Bakani speech on 6th Pacific Islands Regional Initiative (PIRI) Leaders’ Roundtable

6th Pacific Islands Regional Initiative (PIRI) Leaders’ Roundtable


19 May 2021

Opening Speech


Mr. Loi M Bakani, CMG



Dr. Alfred Hannig, Executive Director, Alliance for Financial Inclusion,

Mr. Nobert Mumba, Deputy Executive Director for Alliance for Financial Inclusion (AFI),

Esteemed Governors and Deputy Governors of PIRI member Central Banks,

Representatives of the Alliance for Financial Inclusion (AFI)

Representatives of Partners in the Development in Finance Inclusion

Heads of financial institutions and their representatives

Ladies and Gentlemen,

Welcome to this PIRI Leaders’ Roundtable Meeting.


It gives me great satisfaction to chair the PIRI Leaders’ meeting and would like to acknowledge your presence here and relentless efforts in pursuing our collective objective to improve the lives of the people at the bottom of the pyramid in PIRI member countries. In my remark, I would like to touch on the Covid-19 Pandemic, the rapid rise in the use of financial technology and then turn to de-risking which is the center for our discussions today.

The Pandemic

Since 2020, the PIRI member countries, maybe with the exception of a few members, have been faced with an unprecedented challenge imposed by the Covid-19 pandemic that has changed the norms of everyday living and in the way we communicate, and conduct business. As we speak, globally the total number of cases on the morning of 13th May 2021 stood at 160 million cases with 95.0 million recoveries’ and 3.33 million deaths, bringing some of the most powerful and advanced nations to their knees. The Covid-19 pandemic has also adversely affected the PIRI member nations in varying degrees, however the number of cases may have been curtailed by the low population density among the island countries. As Covid-19 is airborne and spread by close contact, natural barriers such as spatial distribution of our population in both urban and rural areas and public venues and scattered islands have become a natural defense for our people.

In Papua New Guinea, the number of reported cases have reached 13,707 cases, with 11, 034 recoveries and 136 deaths. The pandemic and subsequent Government-imposed lockdowns have profoundly affected everyday dynamics of life; closing of income earning activities of the poor, lowering standards of living, increasing the unbanked and poverty levels. There was panic with shutting down of public institutions which provide vital services such as public hospitals, schools, and private sector activity. The panic in public hospitals has led to non-attendance by medical personnel who turned away non-Covid-19 related patients, which could have led to deaths that are unaccounted for during the crisis. The restrictions to private sector activity led to significant decline in Government revenue, increasing the size of public and private sector debt levels, closure of MSMEs, reducing public confidence in investment and have undermined the Government’s rescue package of fiscal and monetary policy stimulus.

Government support from development partners and domestic financing of the budget through the issuance of Government securities have led to an increase in public debt to GDP ratio exceeding acceptable levels. To stimulate private sector activity, the Government released K200 million with K120 million to the commercial banks and K80 million through the National Development Bank, a state owned development institution. However, the take up of the funds by the private sector was limited because of the overall contraction in the economy and the significant decline in business confidence. Monetary Policy stimulus involved quantitative easing including reduction of the Kina Facility Rate, reduction of the Cash Reserve Requirement, and the provision of a Discount Financing Facility window available to the second and third tier Licensed Financial Institution for liquidity shortfalls support.

The Meteoric rise of Financial Technology

On the wake of Covid-19 pandemic, the use of financial technology has taken a meteoric rise in both development and application. As Governments restricted the movement of people in their normal day to day activities such as shopping, engagements in business activities, important community gatherings, church fellowships, domestic and international business and holiday travels, financial technology has become a useful enabler in modern business and communication, thereby providing an alternative sense of hope and direction for the PIRI members to increase their focus on developing simple banking solutions such as :

  • The South Pacific Central Banks KYC Utility project – a joint initiative of the 9 Central Banks and other partners such as IMF and ADB,
  • ADB Digital Identity technology (i.e. Digizen) being under development in PNG,
  • AFI-led Regional sandbox,
  • PNG regulatory sandbox; and,
  • PNG Retail Electronic Payments System (the National Switch).

Such initiatives, and others, should enable the PIRI members, especially the public to conduct banking and other financial services through the use of mobile phones.


In the PIRI Leaders meeting in Kokopo in May 2017, we first recognized the potential for derisking by internationally active banks and the pitfalls it presented on our economies. As derisking continued to take place among the PIRI member countries, strong calls were made by Governors’ for intervention in several international fora. In this direction, I would like to acknowledge AFI for the initiative to establish the symposium in Sydney in 2019 on the subject of De-risking, discussing options of minimizing its impact and exploring opportunities utilizing financial technology. At the conclusion of that meeting, a De-risking Action Plan Concept Note was developed. It is now recognized that continued de-risking by systemically important financial institutions in the PIRI economies have given rise to regulatory challenges of;

(1) attracting new and reputable international banks; and,

(2) if it is allowed to be acquired by a domestic bank, we stand to compromise competition, quality of banking services and increasing the degree of vulnerability of the financial institutions to AML/CFT issues.

The Sydney symposium covered key action items for the De-risking Action Plan to be implemented by member countries. These were on the need to develop and strengthen:

1. Inter-regulator and Stakeholder Coordination among PIRI member countries on the issues of de-risking,

2. An effective regulatory compliance with AMF/CFT requirements of Financial Action Task Force (FATF),

3. Diagnostics & Monitoring framework to track implementation progress; and,

4. Technology-based Solutions.

This meeting should be very interesting as it will cover the progress on the action items and the way forward.

With this Governors, Ladies and Gentlemen, I now declare the PIRI Leaders’ Roundtable Meeting open.

Thank you.