Baker: Availability of Foreign Currency Still A Challenge
The availability of foreign currency in PNG is still very challenging.
This, according to ANZ PNG managing director Mark Baker, who said this was because the market was still imbalanced. He added that this demand for foreign exchange was outrunning supply which came mainly from the commodity exporters of Papua New Guinea.
“This is a structural imbalance and will only correct itself in the near term with an influx of foreign direct investment (FDI),” Baker said. “The main source of FDI would be from the major resource projects which are still under negotiation between the government and the project sponsors. Other sectors of the economy that generate foreign exchange, such as agriculture, are currently still too small to bridge the foreign exchange gap. In the longer term, the solution is the development of a broader-based economy where the sources of foreign currency are more varied. The development of a broader-based economy requires infrastructure investment, in particular roads to facilitate an effective supply chain and power to facilitate a cost-effective local manufacturing sector.”
On the suggested increase by banks of taxes, Baker said that it is important to have wide and detailed consultations - including the banks themselves. He said that banks in PNG have the most diligent taxpayers and their operations are funded by public and private sectors.
“As with any such measures, there is the potential for unforeseen outcomes and proposed changes like these needs to be very carefully thought through,” Baker said.