Bank of Papua New Guinea: Foreign Exchange Increases
by PNG Business News - February 17, 2022
Photo: Bank of Papua New Guinea
According to a top official, the volume of foreign exchange in Papua New Guinea increased over a six-month period last year.
Benny Popoitai, the acting governor of the Bank of Papua New Guinea, said this was mainly owing to the World Bank's budget assistance loan, liquefied natural gas (LNG) tax collections, and donor funding.
Foreign exchange reserves were at US$2.49 billion (about K8.625 billion) on June 30 last year and had risen to US$2.6 billion (around K8.997 billion) on December 7.
BPNG has maintained its accommodating monetary policy stance since the easing in March 2020, according to Popoitai, in order to assist economic recovery.
The cash reserve requirement (CRR) and kina facility rate (KFR) remained unchanged at 3.0% and 7.00%, respectively.
Except for the Japanese yen and the euro, he claimed the average daily kina exchange rate fell against all major currencies.
He said the kina had declined by 0.2 per cent to US$0.2850, 4.4 per cent to £0.2150 against the British pound and 3.2 per cent to AU$0.3999 against the Australian dollar.
The kina, on the other hand, rose by 4.7 per cent to 32.36 yen, while the euro rose by 0.3 per cent to €0.2524. The trade-weighted index (TWI) fell by 1.4 per cent to 27.46 over the same time period as a result of these currency moves.
“The level of gross foreign exchange reserves at the end of June 2021 was K8.586 billion, sufficient for 8.6 months of total and 16.2 months of non-mineral import covers.
“The Central Bank maintained a neutral monetary policy stance in the June quarter of 2021, keeping the KFR unchanged at three per cent.
This was to encourage private sector activity and support the economic recovery.
The repurchase agreement facility dealing margins were also maintained at 100 basis points on both sides of the KFR.”
In order to regulate liquidity, he added, BPNG has used its open market operation tools in conducting monetary policy.
Reference: The National (15 February 2022). “FX jumped over 6 months in ’21”.
PNG Business News - March 22, 2021
Fleming: Trade is Important for Forex
The availability of foreign currency is crucial for promoting trade and enabling companies to continue importing goods for consumer consumption. It's also essential for investors to know that returns on capital investments can be repatriated if and when enough foreign currency is available in the country, according to Bank South Pacific CEO Robin Fleming. When asked if there is a continuing foreign currency shortage in the country, he said that while foreign currency issues are likely to continue for another two to three years, the prospects for a rebalancing of foreign currency supply and demand are optimistic once construction work on the Papua LNG begins. “Businesses have conditioned themselves to not being able to access foreign currency in a timely manner.,” he said. “But in doing so they have in certain instances forgone growth opportunities and put aside larger investments that would have assisted grow their business.” While reflecting on the rise in COVID-19 cases, Fleming noted that many companies will be worried about the growing number of positive cases. In response to a query about the BSP status, he claimed that their regional businesses have had to deal with the effects of COVID in each of their countries, with travel restrictions affecting their tourist-related industries. In what he described as a difficult year, he said most people did reasonably well. “Our focus in 2021 is to bring our new banking system online in Vanuatu and PNG in 2021 and other countries thereafter,” Fleming said.
PNG Business News - July 26, 2021
Liquidity in the Foreign Exchange Market has Improved
FX market liquidity improved in the second quarter of 2021, with FX market turnover increasing by 19.7%. FX market liquidity increased in the June Quarter 2021, according to the BSP Pacific Economic & Market Insights Quarter 2 Report, with market turnover reaching 23.9 per cent in June and 19.7 per cent in the June Quarter 2021. “FX inflows for the 1st half of 2021 were up 1.8% from one year ago. Reduced foreign currency supplied to the market from Barrick was offset by firmer copper and palm oil prices, combined with increased project-specific and donor foreign currency inflows,” BSP Group General Manager - Treasury Rohan George commented. The Kina is expected to stay constant versus the US dollar, while the Kina/Australian dollar cross rate will benefit from a stable Australian dollar. George predicted that FX market turnover will decline in the September quarter, compared to the high levels observed in the middle of the year. “Outstanding FX orders reduced by 60% over the June quarter, due to strong foreign currency inflows, however as FX inflows taper in July, August outstanding FX orders build up again,” he added. Reference: Loop (21 July 2021). “FX Liquidity Improves”.
PNG Business News - November 08, 2021
FX Liquidity Increases In Q3, According To BSP
According to Bank South Pacific Financial Group Ltd, foreign exchange (FX) liquidity has increased since the second quarter of the year, owing to robust commodities prices mixed with project-specific and donor foreign currency inflows (BSP). The PNG Kina has stayed constant versus the US dollar for the third consecutive quarter, according to the bank's Pacific Economic and Market Insights Q3 2021 Report, although FX reserves at the end of June increased by 7% quarter on quarter, owing to favourable inflow. According to the report, overall foreign exchange reserves were US$2.49 billion (about K8.5 billion) as of June 30. In June, reserve balances rose 7% quarter over quarter, with positive inflows overcoming the Central Bank's monthly intervention of $50 million (about K171.6 million). While FX liquidity increased by 17% in September, BSP Group general manager for treasury Rohan George noted FX turnover increased by 18% during the previous six months, owing to robust commodity prices, particularly for oil, copper, palm oil, and coffee. “Firmer commodity prices, combined with increased project-specific and donor foreign currency inflows offset the lost FX market inflows from the closure of the Porgera gold mine,” he said. “Momentum in FX market turnover is likely to increase into year’s end. Outstanding FX orders have increased from low levels seen in June, and this is expected to continue in October and November with pre-Christmas import orders. “We expect large foreign currency inflows in late November and December to satisfy any foreign currency backlog. “And to manage reduced FX liquidity, businesses should place FX orders (with correct documentation), as soon as possible, ensure orders are cash-backed whilst awaiting execution, tax clearance certificates are current and reflect the expected FX order execution time,” George added. “It was also reported that the kina has been stable and unchanged against the US dollar for the past 11 months; however, the pullback in the AUD/USD (Australian dollars/US dollars), amid Coronavirus (Covid-19) related weakness in the Australian economy, strengthened the Kina/AUD, and the Australian dollar is expected to outperform into year’s end as the Australian economy opens up.” Reference: The National (1 November 2021> “FX liquidity rising in Q3: BSP”
PNG Business News - June 05, 2023
PNG PM Marape Participates in PIF Leaders Breakfast Caucas
Photo: PNG PM Marape Participates in PIF Leaders Breakfast Caucas Prior to the Korean-Pacific Islands Leaders (Kor-Pic) Meeting, Papua New Guinea Prime Minister Marape joined other PIC Leaders for a breakfast caucus Chaired by Cook Islands Prime Minister and current Pacific Islands Forum Chair Mark Brown, to discuss the agenda and a common position on shared development issues. Prime Minister Marape said climate variation, being the perennial issue including sourcing appropriate development assistance from the Korean Government was high on the agenda. He said the encouragement during the caucus was for all PIC Leaders to discuss their developmental challenges and put forward their ideas on how Korean Development assistance could complement the 2050 Blue Pacific Strategy. Following this caucus, Prime Minister Marape, met with Australian Deputy Prime Minister Richard Marles. Their discussions were centered around progress of the proposed Bilateral Security Treaty (BST), the recently concluded Defense Cooperation Agreement with the US, Visa issues and the PNG NRL Bid. On the BST, Prime Minister Marape mentioned that it was work in progress and required the PNG side to consult our domestic processes and sovereign laws in relation to certain wordings and provisions. He also conveyed his apologies to Prime Minister Anthony Albanese for the delay in formalising this proposed Treaty with Australia. For the DCA with the US, Prime Minister Marape informed that it was centered around improving the PNGDF's capabilities and interoperability including protecting our frontiers and sovereignty. He said it was non-discriminatory and PNG was open to entering into similar arrangements with its bilateral partners. “In fact, the DCA would also complement domestic law enforcement,” Prime Minister Marape said. “The Ship Rider Agreement on the other hand was also vital in combating illegal fishing and transnational crimes.” For Visa issues, Deputy Prime Minister Marles informed that the current Australian Government was fully aware of the situation and following the Ministerial Forum in February this year in Canberra, had established a Joint Ministerial Team to work on bringing the Australian visa processing facility back on shore to PNG. Prime Minister Marape in his response said that all processes from both sides had to be attended to in order for smooth facilitation and for citizens and businesses to continue without much hindrance now and heading into 2050 when PNG celebrates 50 years of nationhood. On Papua New Guinea’s NRL Bid, Prime Minister Marape explained that PNG was still very keen as rugby league was a major unifying factor, bringing our 800 tribes together as one people. In closing Prime Minister Marape assured Deputy Prime Minister Marles that PNG in no way would compromise its excellent existing bilateral relations with Australia and further stressed that PNG was capable of managing its sovereign affairs on its terms, systems and processes.
PNG Business News - June 05, 2023
ADB Helps Launch Vocational Education Project in PNG
The Asian Development Bank (ADB) and the governments of Australia and Papua New Guinea (PNG) today launched a cofinanced project to improve the country’s technical and vocational education and training (TVET) program. PNG's Deputy Prime Minister John Rosso delivered a keynote address at the launch event at Port Moresby Technical College. PNG’s Minister of Higher Education, Research, Science and Technology, and Sports Don Polye, ADB Country Director for Papua New Guinea David Hill, and Australian High Commission Minister Counsellor Paul Lehmann all spoke at the event. The Improved Technical and Vocational Education and Training for Employment Project financed by ADB and the governments of Australia and PNG will strengthen the country’s TVET program and help prepare students to be more competitive and responsive to employment and industry demands. “We hope this project will become a model for all vocational education and skills training in TVET colleges in the country,” said Mr. Rosso. “The beneficiaries of this project—young, skilled workers, including women and men—represent PNG’s future, and through this project, the future of vocational education in PNG looks bright.” This project aims to boost the numbers of skilled workers in the construction and agriculture sectors where demand is high. “We will work with our partners to help advance reforms in the vocational education and skills training space in PNG,” said Mr.Hill. “These sought-after skills in priority sectors will help grow PNG’s economy.” The TVET sector of PNG’s education system comprises public, religious, or private institutions, including technical and business colleges offering postsecondary courses and vocational training. “The Australian government is pleased to be supporting the Government of Papua New Guinea to achieve its reform goals in technical and vocational education and training to increase the number and quality of skilled workers,” said Australian High Commission Minister Counsellor Paul Lehmann. “My vision for the TVET for Employment Project is that it will perform as an innovation and technology business incubator across PNG,” said Mr. Polye. “The project is the embodiment of a new approach—building a culture of quality education and innovation in a renewed and revitalized TVET sector.” The Improved Technical and Vocational Education and Training for Employment Project is funded through a $50 million concessional loan from ADB and a $10.6 million grant from Australia. The Government of PNG is also contributing $5.7 million. ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.
PNG Business News - June 05, 2023
PNG Forges an Innovation-fueled Partnership with South Korea in Digital Transformation
Papua New Guinea was amongst seven other Pacific Island countries to sign a partnership statement of intent with the Republic of Korea to further cooperation and partnership in digital transformation. Information and Communications Technology Minister Timothy Masiu, who also was appointed co- chair of the just concluded Korea -Pacific Islands Digital Ministerial Conference in Seoul, South Korea, signed the statement together with the meeting chairman Korean Minister for Science and ICT Dr Lee Jong-Ho. The others who signed the partnership intent are Tonga, Nauru, Samoa, Palau, Cook Islands and Kiribati. Australia and the World Bank also attended the meeting as supporting partners. The Statement of Intent states; The partnership recognize digitalization has transformed not only daily lives but also shapes innovation in all sectors including politics, economy, society, culture and environment. Recognize and note that digital technology offers great potential to address various social economic challenges that come with rapid transformation of society. Agree on continued partnership in digital transformation inclusive of sustainable development will be the key to future prosperity of the people of Korea and the pacific. Agree on sharing digital vision of policies will pave way for strong partnership to digital co-prosperity. Mr Masiu expressed deep satisfaction that Korea , the global leading innovation country, has agreed to partner with Pacific countries including Papua New Guinea in digital transformation that will greatly enhance communication in a vast area like the Pacific and more so, strengthen supporting technology to better access to health, education and business. He told the conference that Papua New Guinea has begun the digital transformation with Parliament passing the Digital Government Act 2022 and relevant policies, and welcomed the partnership with the Republic of Korea, which he says, will go a long way in progressing the digital transformation agenda for PNG and the region. Mr Masiu had bilateral meeting with his South Korean counterpart, further seeking a stronger country to country relations in digital transformation and support to the National Broadcasting Corporation proposing a partnership between the NBC and the Korean Broadcasting Services. The Minister has formally invited the Korean Minister for Science and ICT to visit Papua New Guinea for the Pacific ICT meeting in August 2023 or to accompany the South Korean President who has been invited by Prime Minister James Marape to visit PNG. Mr Marape was in Seoul also this week for the Korea- Pacific Islands Forum Leaders meeting. Minister Dr Lee Jong-Ho acknowledges the leadership of Papua New Guinea in digital transformation and reaffirmed its support to PNG and the other Pacific Island countries.