Abel confirms budget loans move

Business

By MARK HAIHUIE
BUDGET support loans totalling US$250 million (K827.2mil) is expected from the Asian Development Bank and World Bank, says Deputy Prime Minister and Treasurer Charles Abel.
The ADB will provide US$100 million (K331 million) this month while World Bank will provide US$150 million (K496.3 million) next month.
Abel said this would support the easing of foreign exchange demand, adding onto similar facilities taken by the government during the half year.
“We have met all requirement for Asia Development Bank budget support loan, which is another US$100 million that we are supposed to receive in the coming weeks,” he said
“Then we have the US$150 million World Bank budget support that is coming in sometime in September.
“This was an achievement in re-engaging ADB and the World Bank on budget support loans after several years, showing Government policies are aligned with international norms.
“There is already some relief coming through the banking system in terms of foreign exchange.
“That excess demand is starting to come down a little bit.
“Bank of PNG has increased access to foreign exchange because these facilities have brought US dollars in.” Abel said PNG had more exports than imports which had been the case for a number of years.
“What that should mean is that we should have excess of foreign currency, but we don’t,” he said
“The physical goods go out the country but the financial flows don’t all come back and that is a problem.”
Abel said Treasury and BPNG were working on foreign exchange requirements to correct the situation and ensure all revenue flows come back to the country.
“That same issue will come through in the fiscal terms that we will construct for the new projects,” he said.
“There has to be some responsibility by these companies to bring back proceeds from exports that come from PNG back onto PNG soil.”
International reserves with BPNG were at US$1.73 billion at the end of June this year.

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