PNG's foreign currency exchange market stable
The country’s foreign currency order book currently sits at around K1 billion from a high of almost K2 billion in 2017, according to the Central bank.
Asked about the current status of the foreign exchange market, bank governor Loi Bakani stated that while the market is stable at the moment, the bank continues to intervene in the market to meet demand.
“We have done a lot more through government to bring in the foreign exchange that is much needed to address the situation.
“We brought in all the budget support for ADB and the World Bank, and the final drawdown of the Credit Suisse syndicated loan and of course the US$500 million sovereign bond last year.
“Together with some of the existing PNG LNG started to pay some dividends last year, taxes, which came direct to us and we gave the kina to government,” he said.
He said the mentioned inflows together with other ongoing flows like Ok Tedi, Kumul Petroleum Holdings, oil palm, and other mining operations through dividends and taxes helps bring in foreign currency.
“We went as far as US$2.2 billion (foreign reserves) after we got the US$500million sovereign bond, and we have used already close of over US$400 million to give out to the market to clear the backlog.
“The most significant payments that we have cleared is mainly import payments and service payments and of course some dividends.”
He said capital outflow still continuous to be stifled due to the issue, with many still not declaring dividends as a result of the backlog issues and priority placed on orders.
“There are a lot of companies here that are not declaring their dividends yet, but they are still holding their money in kina.
“Over time we will allow them to come onto the order book.
The order book at the moment stands around K1 billion kina. And most of it is import payments.
“That you can imagine it has come down from close to K2 billion in 2017. Things are very stable at the moment,” Mr Bakani said.
He said turnaround of FX orders has reduced significantly from up to 6 months to 2 weeks for an average order.
“We have been working very closely with (commercial) banks to clear small orders (so) they don’t bunch them up into small parcels.
“If small it’s cleared immediately.
For bigger orders, they will of course supply some judgment how they will clear them overtime,” Bakani said.