BNL: Improved gold prices to lift growth

By GEDION TIMOTHY
BARRICK Niguini Limited executive managing director Greg Walker says the improved gold pricing will boost the national economy with greater returns through taxes (corporate) and royalties.
But he warns that the temptation to borrow when the prices of other resources remain depressed must be resisted.
Walker said since a large portion of the national economy was based on natural resources, in particular minerals and LNG, the current environment of low resource prices had place a burden on the national budget.
“The temptation to borrow today and repay when resource prices recover should be resisted,” he said.
“Instead, a programme of spending cuts and putting the focus on essential services such as law and order, health, education and roads (should be implemented),” Walker told The National last week.
A Government source said there had been some positive overall economic outlook but the pressure for a supplementary budget remained imminent. This is because there is a moderate recovery of resource prices (oil process which shadows LNG prices exceeding US$50 (K45) per barrel from as low as US$26 (K23) earlier this year and other mineral prices.)
Gold prices have recovered very well and remain above US$1200 an ounce, greatly improving the prospects for significant profits by major gold miners in the country.
This in turn will provide higher tax revenues to the government.
The source said there had been a significant increase in crude oil prices, which had risen to US$48 (K43) a barrel.
There is optimism that it will exceed US$50 in the third quarter and rise a little more in the fourth quarter, which could benefit PNG revenues.