Papua New Guinea Grapples with Cash Flow Crisis
Port Moresby, Papua New Guinea - A concerning report from Pini Accountants and Advisors paints a grim picture for Papua New Guinea's economy. Principal Andrew Pini revealed that a staggering 90 companies are struggling with severe cash flow problems, potentially leading to their closure.
The troubling trend is evident in the surge of signed consent forms, legal documents initiated when creditors seek liquidation due to unpaid debts. Pini has signed over 80 such forms in 2023 alone, with an additional 10 in the first quarter of 2024.
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| PNG Opposition Leader Douglas Tomuriesa |
Opposition Leader Douglas Tomuriesa echoed anxieties, highlighting the knock-on effects on government functionality. Public servants, despite receiving salaries, face limitations in performing their duties due to a lack of essential supplies like stationery and fuel.
Pini blames the company closures on a combination of prolonged foreign exchange shortages and rampant crime, making it difficult for businesses to meet financial obligations. The situation suggests either insufficient revenue generation or crippling debt burdens, hindering debt repayment and exacerbating cash flow issues.
Pini emphasizes the need for a more supportive business environment. He calls for lower crime rates and a swift resolution to the forex shortage crisis to prevent further company closures.
To address the crisis, Pini proposes injecting cash into the economy, particularly prioritizing small and medium-sized enterprises (SMEs) and agricultural businesses. Additionally, he urges larger businesses, including foreign-owned ones, to retain funds within the country to strengthen national reserves and stabilize the currency.
Pini's urgent call for collaboration underscores the critical need to tackle cash flow woes. Only through concerted efforts can Papua New Guinea ensure economic stability and a conducive environment for businesses to thrive.
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