As a result, the country’s balance of payments has shown an overall surplus of K526 million up to June 2010, and the level of gross foreign exchange reserves at the end of June 2010 was $ million, sufficient for 10.9 months of total import cover. Inflation however remains a concern due to increased domestic demand.
The annual headline inflation was 6.2 percent in June 2010 and is expected to be around 7.0 percent by end of 2010. Price pressures are expected to come from domestic demand related to the PNG LNG project and Government spending. In coherence, the Central Bank continued to take a cautious approach to Monetary Policy.