By Hope Imaka – EM TV Online
Papua New Guinea is facing its toughest economic spite in recent years, with the biggest budget blowout in the history of the country. However, the government and Central Bank have provided reassurance about the safety of the economy.
Bank of PNG Governor, Loi Bakani, gave reassurance yesterday in Cairns at the Australia/Papua New Guinea Business Forum.
While acknowledging the foreign exchange shortage, Bakani said the bank and the government is seeking foreign currency facilities from external sources, and that expected resource sector inflows should soon turn the situation around.
The government of PNG has already made large cuts to this year’s budget, and there are signs that it could be preparing to make more cuts to cope with ballooning debt.
PNG’s Minister of Petroleum and Energy, Ben Micah, said that the government was taking measures within its means to manage the current economic difficulties.
“Papua New Guinea, contrary to what doomsdayers are saying, is not about to sink or is not about to go bankrupt tomorrow,” said Micah.
“All the issues of shortage of foreign reserves in the banking system and issues that are affecting our economy – because of the drop in oil prices and the not very bullish price of minerals – are only temporary things, issues that are cyclical. And we will bounce back at the appropriate time,” he added.
When addressing the fiscal difficulties facing PNG, Bakani blamed social media for spreading misinformation about the economy.
“Medium to long term prospects and outlook for PNG economy are positive and strong,” read Bakani’s presentation on the PNG Economic Summary.
The Central Bank Governor said that foreign reserves at present were $US1.7 billion, or 10 months total import cover.
However, on the contrary, it was reported yesterday that the country’s foreign exchange situation was so bad that the Bank of PNG had been rationing foreign currency by limiting how much people could send out, and many foreign suppliers are waiting to be paid for goods they had sold to PNG-based importers.
It is understood that the Central Bank’s efforts to borrow foreign currency from the International Finance Corporation were unsuccessful.