BSP: Foreign exchange low

Business, Normal

The National, Monday December 21st, 2015


THE foreign exchange inflows remain lower than had been experienced in the recent past because of the low commodity prices in the international market, according to Bank South Pacific chief executive officer Robin Fleming.

He told The National that lower commodity prices which affected royalties, taxes and dividends associated with the extractive industries had an effect on currency inflows.

 “The El Nino has also contributed to this, with the shutdown of the Ok Tedi mine for four months now, which has reduced inflows normally associated with that mines operational expenses,” Fleming said. 

He said import demand however continued to be quite strong, resulting in a build-up of orders, resulting in delays in payments to overseas suppliers.

“The Bank of PNG has been somewhat more active in December to provide additional support for importers and this has helped reduce some of the longer outstanding import payments,” he said.

“For the short-term, a circuit-breaker is required and the sovereign bond will assist with this.” 

 He said the bond would raise the United States dollar to retire kina-denominated the Government debt which would reduce the prospect of the Government budget deficit funding crowding out lending activities.

He said the sovereign bond would also provide a source of United States dollars to replenish reserves and settle private sector import payables.

“It is understood Government officials and their international lending advisers will participate in a roadshow overseas early in 2016 to progress the sovereign bond,” Fleming said.