Bank official: Reserves sufficient despite decrease

Business, Normal

The National, Friday June 19th, 2015

 THE US$2 billion (K5.1 billion) reserves is sufficient for the country, Bank of Papua New Guinea says. 

BPNG assistant governor Dr Gae Kauzi said even though there was a drop in reserves in recent years, the current US$2.1 billion (K5.58 billion) was enough to support the country for another 12 months. 

“THE PNG reserves has come down in the last two years after reaching a high of about US$3 billion,” Kauzi said.

“It is currently around the mark US$2.1 billion. But what is crucial this US$2.1 billion is sufficient to cover around 11 months of total imports. 

“Total import cover is around eight months … That is higher than the five months import cover the IMF (International Monetary Fund) imposes as the minimum import cover. 

“Even though that the reserve level is coming down, in terms of import cover, we are ok,” he said.

Speaking during the 2015 PNG Update conference in Port Moresby yesterday, Kauzi also highlighted challenges that the country could face as a result of borrowing and spending by the government on key development indicators.

“What the nation through the government is doing is borrowing against future government revenue be it from LNG or other sources,” he said.

“From 2012 to 2014, the government invested heavily in infrastructure, health, education, and law and order and the provinces with the increase in total government expenditure over this period at 18 per cent. 

“This growth in expenditure has resulted in deficit of 4.4 per cent, 7.8 per cent and 7.3 per cent in 2012, 2013 and 2014 respectively.

“The biggest challenge and obstacle to achieving this is the capacity constraint in achieving quality and effective spending.”