Bank records K999mil deficit in payments

THERE was an overall balance of payments deficit of K999 million for the last nine months to September, Bank of Papua New Guinea governor Loi Bakani says.
Bakani stated in the bank’s Quarterly Economic Bulletin September Quarter 2019 released on Wednesday that there was a surplus of K529 million in the corresponding nine months of 2018.
“A deficit in the capital and financial account more than offset a surplus in the current account,” he said.
“The current account recorded a surplus of K16,272 million for the nine months to September 2019, compared to a surplus of K12,610 million in the corresponding period of 2018.
“This was due to a higher trade account surplus, net income and transfer receipts, combined with lower net service payments.
“The capital and financial account recorded a deficit of K17,268 million in nine months to September 2019, compared to K12,070.7 million in the corresponding nine months of 2018.
“This resulted from outflows reflecting repayments of intercompany loans and build-up in foreign currency account balances of mining, oil and LNG (liquefied natural gas) companies, combined with Government loan repayments, respectively.”
Bakani also stated that net claims on the Central Government by financial corporations increased by K288.3 million to K12,864.4 million in the September quarter of 2019, following an increase of K152.6 million in the previous quarter.
“This resulted from increased issuance of Government securities.
“In the September quarter of 2019, total domestic credit extended by financial corporations to the private sector, public non-financial corporations and ‘provincial and local level governments’ increased by K262.4 million to K18,052.8 million, following an increase of K247.7 million in the previous quarter.
“This was attributed to increases of K204.5 million and K58.0 million in lending to the public non-financial corporations and private sector, respectively.
“The increase in private sector credit was broad-based across sectors, with notable increase in the agriculture, wholesale/retail, petroleum and gas, and the household sectors.
“The fiscal operations of the national government over the nine months to September 2019 show a higher deficit of K1,248.8 million, compared to a deficit of K1,006.5 million in the corresponding period of 2018.
“The deficit represents 1.4 per cent of nominal GDP (gross domestic product).”