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Business |
Kamit reminds government on prudent fiscal handling
BANK of Papua New Guinea has reminded
the Government to maintain sound prudent fiscal management of the
economy in the lead up to the national election in June.
Central Bank Governor Wilson Kamit warned that a faster drawdown
of appropriations in the trust accounts together with the 2007
budgeted expenditure would exacerbate the already high level of
liquidity in the banking system and pose a “threat” to price
stability.
In the bank’s quarterly economic bulletin for the December quarter
of last year, Mr Kamit said the bank will closely monitor the
impact of excess liquidity on interest rates, exchange rate and
inflation, and make appropriate changes to the monetary policy
stance to ensure stability of prices.
“Indicators available to the bank reflected continued stability in
macroeconomic conditions that resulted in increased economic
activity in 2006,” Mr Kamit said.
“Strong export performance was driven by higher international
prices and resulted in a record balance of payments (BOP) surplus
and stable kina exchange rate,” he said.
Since last December, the daily average exchange rate remained
unchanged at US$0.3300, while it appreciated against the
Australian dollar to A$0.4217 at the end of last month.
The overall surplus in the BOP was K1,942 million last year due to
a net inflow in the capital and financial accounts, compared to a
surplus of K296 million in 2005.
The current account recorded a lower surplus of K1,238 million in
2006, compared to a surplus of K1,887 million in 2005.
 
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