Business News

The Debate Over the State of the PNG Economy Continues

by Bethanie Harriman – EM TV News, Lae

The debate over the state of the economy continues between the opposition and the national government.

Yesterday, Opposition Leader, Sam Basil, demanded the national government come out and tell the truth about the declining state of the economy and the foreign currency situation.

“Many businesses are suffering, as I’ve said before, we are not importing enough, some businesses will be forced to close, most of our factories here import, most of our car dealers import, most of our materials come from overseas, we might as well shut businesses after June. Foreign exchange is depleting,” said Basil.

While speaking in Cairns during the Australia Papua New Guinea Business Forum, Prime Minister, Peter O’Neill, assured investors that the economy is stable.

“We are managing debt levels. Let me tell [you] today that it remains well below our ceiling of a 35 per cent ratio of debt to GDP.

“In fact, it is 28 per cent of the new GDP numbers that have been released which remain at around K18 billion for this year. Out of which K4 billion is foreign debt, largely through concessional loans,” O’Neill said.

“In fact, if you look at the numbers in 2015, just over K90 million was paid to foreign debt servicing in that year,” he added.

The PM said that the government is adjusting spending, increasing internal efficiencies and listening to the business community on how it can improve systems.

The Central Bank reports that foreign reserves at present are $US1.7 billion, or 10 months total import cover.

However, Sam Basil’s comments come after Lae Chamber of Commerce President, Alan McLay, spoke out on behalf of Lae manufacturing companies that are struggling to secure foreign currency to pay for bills overseas. 

“Some companies are doing it tough, they are laying off some of their workers, but really some of them a looking whether they can keep going,” said McLay, earlier this month.

Michael Kingston, who took over operations at KK Kingston from his father Kieth, earlier pleaded with the government to fix the problem. 

“It’s nearly impossible because you just can’t get the money to pay your suppliers,” said Kingston.

Also in Cairns, Bank of PNG Governor, Loi 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.

He said the government 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.

The debate is certainly alive here in the country and the Prime Minister, Peter O’Neil while addressing investors during the Australia PNG Business Forum said the foreign currency issue will be addressed.

“I can assure you that in the coming weeks we see an increasingly improved foreign currency availability and we thank the commercial banks for working closely, particularly Westpac, ANZ and BSP and Kina, who are working closely with the Central Bank in addressing this issue with government,” said PM O’Neill.

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