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Forex issue a worry for Business houses in PNG

The foreign exchange liquidity problem in Papua New Guinea is taking a toll on many business houses, according to the head of foreign exchange at Moni Plus, Mal Parsonson.
He said Moni Plus FX, which began trading in January 2013, faced the same difficulty as all other foreign exchange dealers in the PNG market, and was forced to ration currency sales.

Parsonson said that the liquidity problem had been chronic for some years – since the end of the PNG LNG project construction stage.
“The effective revaluation and imposition of the trading ban has appeared to exacerbate the situation since June last year,” he said.
Prime Minister Peter O’Neill had said last week that the Government was resorting to short-term agreements to address the problem.
O’Neill said a Government delegation was in Washington holding talks with the lending arm of the Work Bank - the International Finance Corporation - with “other partners”.
Last week, Puma Energy, a major importer of crude oil, said it had been badly affected by the forex shortage.
Puma Energy Business Support general manager Hulala Tokome said it was no secret that the economy faced forex liquidity and Puma faced the same problem.
Parsonson said the US$250 million facility which the Government was trying to secure did not seem enough.
“Anecdotal evidence suggests the orders outstanding are more in the order of K3 billion. The IFC facility would provide only short-term relief,” he said.
He said the one of the problems was the large amount of private sector investment in Port Moresby.
“Look around the city at all the cranes in the air, and the cars that arrive every fortnight,” he said.
“Those developments require very large purchases from overseas, and the economy just does not have the FX liquidity at the moment to fund those imports.
“We need the big new projects such as Gulf LNG, Wafi-Golpu and Frieda River to come online, but those are all over 12 months away.”

The National/ ONE PNG
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