FX shortage affects jobs

By CLARISSA MOI
THE shortage of foreign exchange is severely affecting not only businesses in the country but has also reduced the number of jobs available, says the Port Moresby Chamber of Commerce and Industry (POMCCI).
President Rio Fiocco said the negative impact on employment and the Government’s ability to service foreign loans could not be underestimated.
“It’s extremely serious,” he said in response to questions from The National on POMCCI’s view about shortage of foreign exchange which was impacting business operations. Companies are already deferring investment decisions due to lack of confidence, primarily off the back of “Take Back PNG” slogans and failure to sign the Total (for the development of Papua LNG project) and Wafi-Golpu deals,” he said.
“Businesses are right-sizing as we speak and mass retrenchments and redundancies are taking place as companies look for long override efficiencies (in hindsight, some held off while they waited for positive outcomes around these and other mining projects).
“I believe a falling exchange rate (AUD/PNG) will carry major negative repercussions for the economy.
“PNG is not yet ready for import replacement and a falling exchange rate will add a burden to PNG families and also the Government’s ability to service its foreign debt.”
Brian Bell Group Ltd chief executive officer Cameron Mackellar said last week that the issue of foreign exchange from last year would still be experienced this year.
Meanwhile, Bank South Pacific chief executive officer Robin Fleming noted that the Government had indicated in the 2020 Budget that foreign exchange availability would improve this year.
“If as was suggested, the additional foreign exchange would be sourced from loan partners such as Australia, this would in all likelihood see a commensurate reduction in domestic liquidity,” he said.
“Apart from the flow-on effects for gross domestic product (GDP) and business confidence, this is open of the reasons why projects such as the next LNG (liquefied natural gas) projects or Wafi-Golpu are important as the foreign investment introduces capital to Papua New Guinea that does not dilute domestic liquidity.”