November 30, 2015

Forex impact a worry on PNG's economy

THE current foreign exchange market would have an impact on foreign direct investments in the country, according to Bank South Pacific chief executive officer Robin Fleming.
Fleming, giving an outlook of foreign exchange in the country, said foreign exchange through the sovereign bond component had been linked to foreign direct investments.
Fleming said on a longer term, “foreign direct investment in the country will be the Papuan LNG project, and the Wafi Golpu mine”.
“I understand they (Wafi Golpu) are getting close to financial conditions and agreements which will bring US$300 million (K876 million) into the market next year,” Fleming said.
“Ok Tedi has obviously been a contributing factor to the foreign exchange.”
He said the bank hoped that by the beginning of the second quarter next year, Ok Tedi would come into the market level similar to 2015. 
In addition, a lot of the work has to be undertaken to rehabilitate and improve Ok Tedi’s extraction capabilities.
He said the profit and performance was “the longer term”. 
“The shorter term outlook remains that the sovereign bond has got both the debt component to replace in the existing domestic debt. This is to make sure there’s no crowding out of the domestic investors which could result in the increased interest rates and the foreign exchange component.”
Fleming said this could be ensured by having foreign reserves which the Central Bank would be passing on to the banks to ensure importers were able to satisfy some of the pent-up demand which had been built. The National/ONE PNG