Huge reversal in BOP projected

 A DEFICIT of K504.6 million in overall balance of payments (BOP)has been projected for this year by the Bank of Papua New Guinea.

BPNG Governor Loi Bakani said this was a turnaround from the earlier projection for a surplus of K1.2 billion made in March of this year, a result mostly due to a decline in the mining sector.

He said the level of international reserves was projected to be US$1.92 million (K5.4 million), which he said was sufficient for 7.9 months and 15.6 months of non-mineral import covers.

“The current account surplus is projected to be lower at K7.63 billion, largely as a result of lower than expected LNG related revenue flows, temporary closure of the Ok Tedi mine and downward revisions of the international commodity prices,” Bakani said in the central bank’s September monetary policy statement released this week.

“The capital and financial account is projected to be in deficit of K8.13 billion, partly reflecting the retention of funds offshore by the LNG project partners for debt service payments. In the medium term, the overall balance of payments is expected to improve. “The current account is projected to be in surplus due to flows from mineral and non-mineral export receipts, with a notable increase in 2017.

He said with the passing of the new Organic Law on Sovereign Wealth Fund in July of this year, it now paved the way for authorities to establish the SWF.

“Once established, the Government should prudently manage revenue inflows from LNG and other mineral projects in a sustainable manner,” Bakani said.