Govt’s commitment to pay arrears good for businesses: Bank

THE Government’s commitment to settle K2.5 billion worth of arrears to the private sector will provide liquidity for businesses in a subdued economy, according to Kina Bank.
Responding to queries from The National, the bank’s wealth management division said the construction sector was expected to benefit and provide a boost to the economy as a result. “The Government has committed to settling K2.5 billion worth of arrears to the private sector over the next three years, starting with K1.1 billion in 2020,” the bank said.
“The settlement of arrears will provide liquidity for the private sector in an otherwise subdued economy.
“Spending in the construction sector is also expected to provide some boost to the economy in 2020.
“These developments will provide a beneficial uplift, but overall risks will remain tilted to the downside.”
On the issue of foreign exchange, the bank said its shortages would continue to be an impediment to businesses in PNG this year.
“Proceeds of the US$300 million (K1bil) budget support funding from the Australian government is expected to help ease some pressure in the immediate term.
“If the Government is successful in achieving borrowing from offshore, proceeds are expected to support FX requirements as they are brought onshore in the second half of 2020.”
On the bank’s progress, it said it had recently achieved a significant expansion of its business “which provides the platform to continue to grow strongly into the future”.
“Our growth is linked to the retail segment, where we are growing our home loan business and the SME (Small Medium Enterprise) sector of the PNG economy where we see good levels of activity.
“Kina Bank has a significant level of funds available to lend to those borrowers wanting to buy their first home, to borrowers looking at the acquisition of an investment property.”