PNG Central Bank Governor : Reserves will last

THE financial pinch of stock market users caused by the sudden appreciation of the kina early this month was highlighted at the annual CPA PNG Kokopo 2014 Conference with Bank of Papua New Guinea Governor Loi Bakani.

During question and answer time, Mr Bakani was asked how long the current reserves that were at US$2 billion would last, assuming things do not improve.

The $US2.8 billion in total, excluding the extractive industry sector revenue, could take us through up to seven months, Bakani said.

"In terms of benchmarks, three months is where you will become a bit nervous in international standards but we have more than that ... knowing that in six months’ time ... we would have some money from the LNG, which is very likely."

Bakani said: "The lenders of the money of the LNG Project are holding onto the money until they are sure that the project can continue without any disruption, without any problem at all so that they can get their money back."

He said there was a lot of money being lent out by international financier banks to all the stakeholders in the project, including the government, so the money would be there.

This meant that by the second quarter of 2015, when the six months is up, they would distribute the revenue to all partners in the project.

"What I am saying is, with these reserves, we will continue to support the market.

"In good times we accumulate it. And this is what floating the exchange rate does. The money that we have there is to give to the private sector when it needs it; when they don’t need it you take it and lock it up."

Bakani said: "The band that I imposed on the 4th of June may sound like we are fixing a rate, no, the rate can still go down but the band is fixed so they cannot trade higher than what is imposed."

BPNG manages the fluctuations in the exchange rate and supports the private sector, prioritizing with government needs. It was established by the Act of Parliament in 1973.

 

PNG Today/Post Courier