Deal delay slows Forex inflow

By CLARISSA MOI
THE delay in an agreement between the Government and Barrick Niugini Ltd on the Porgera gold mine could see foreign exchange inflows being lower next year, according to the Bank South Pacific.
Chief executive officer Robin Fleming said there were a couple of key factors that would influence foreign exchange availability next year, including the delay in resolving discussions on the Poregra gold mine in Enga.
“Resolution of the discussions between the Government and Barrick on the Porgera mine is important from a foreign exchange availability perspective with annual inflows associated with working capital for the mine having been significant,” he said.
“Delays in reaching an agreement will see foreign exchange inflows being lower in 2021 than was the case in 2020.”
On April 24, the Government announced that it would not renew BNL’s 20-year special mining lease for the mine. Fleming also said oil prices continue to have an influence on benefits that flow to Government and other PNG LNG (liquefied natural gas) stakeholders and an ongoing increase in prices to above US$50 (K172.22) per barrel will provide some upside for PNG.
“Ok Tedi has been a great success story and as a wholly-owned PNG company, they continue to provide support for the foreign exchange markets and with their upgraded capacity and operating efficiency they should continue to support the foreign exchange market,” he said.
While providing an outlook for the business environment next year, Fleming said the progression of the Papua LNG project with operator Total would be seen by businesses as key to a positive outcome for 2021, as will, the availability and roll out of a Covid-19 vaccine globally and in the region.
He said normal business travel would not be able to resume until vaccinations were available.
Businesses in the Cook Islands, Fiji, Samoa, the Solomon Islands, Tonga and Vanuatu heavily depend on tourism-related activity.
“In PNG, the hotel sector had been experiencing over supply towards the end of 2019 and this was made worse by international travel restrictions, hence, again the importance of a vaccine and resumption of more regular travel, which will benefit our airlines,” he said.
“As business demand increases, employment increases and with a lag factor, government goods tax and services and tax revenue increases.”