Bank projects 3.5pc recovery

THE BSP Financial Group Ltd has projected an economic growth of 3.5 per cent for PNG this year in its first quarterly Pacific economic and market (PEM) insights for 2021.
The bank said global economy was projected to grow at double the rate at 6 per cent, a big turnaround from the predicted -3.3 per cent in 2020 when the world was hit by the Covid-19 pandemic.
The Pem insight attributed the rebound of the PNG economy to the resumption of Barrick Niugini Ltd’s operations at the Porgera gold mine and the PNG LNG’s forecast to expand PNG’s liquefied natural gas (LNG) industry.
BSP Group chief executive officer Robin Fleming said the signing of the agreement between Barrick and the Government was well received by the business community.
He said the agreement had given businesses much needed confidence in the rehabilitation process of the mine production recommencing which would in turn bring foreign exchange into the country and boost loan and domestic economic activity. While PNG’s economy is expected to rebound, Pacific island countries have been overwhelmed by the collapse in global tourism, despite the low incidence of the Covid-19.
Growth in these economies is expected to remain around nine per cent below pre-pandemic levels.
Vanuatu’s economy is projected to increase to 3.2 per cent in 2021, a 12.4 per cent jump from 2020 due to increased fiscal spending on infrastructure.
While the kina remained unchanged against the US dollar in the first quarter of 2021, the dollar rallied against most currencies, as higher than expected economic and employment growth created inflationary concerns and fuelled speculation that the US federal reserve would tighten monetary policy earlier than markets had initially expected.
The country’s level of gross international reserves fell to US$2.41 billion (K8.31bil) as of March 18, 2021 from US$2.7bil (K9.39bil) at the end of December 2020.
The fall in reserves was mainly due to external Government debt servicing and Central Bank intervention to improve liquidity in the foreign exchange market.
The report highlighted BSP’s performance and the bank’s goals for the year, the main one being admission to the Australian stock exchange.
“If successful, we will have access to alternative source capital to fund future growth ambitions, deliver services to our customers and enhance existing shareholder liquidity,” Fleming said.