Liquidity up by K300m


DOMESTIC liquidity in the country has increased by around K300 million in recent months, according to the Bank South Pacific (BSP).
This was revealed by BSP group chief executive officer Robin Fleming when responding to questions from The National about the current state of domestic liquidity across the banking sector.
“System liquidity has improved in recent months with liquidity generally being sufficient to fund loan growth albeit at low levels,” he said.
“BSP has managed the domestic liquidity through a combination of moving investments in government securities to lending and also a more selective approach to new to BSP lending.
“The two major influences on domestic liquidity will be domestic financing of the budget deficit and also foreign currency intervention by Bank of PNG (BPNG).
“BPNG has continued to provide foreign currency to the market however poor commodity prices as well as increased importer demand has seen total orders in the market increase over the past four months.”
Domestic liquidity, which is the amount of cash and equivalent securities circulating within the nation’s economy, had decreased from K21 billion in January last year, to K19.9 million at the end of May this year.
This had caused constraints on many banks in the country in terms of their loan portfolios and credit to business houses and individuals.
When asked about the ease of doing business in PNG, Fleming said despite PNG dropping in the rankings of the World Bank’s “Doing Business 2020” study, it was still ahead of other countries in the region in some areas.
“In certain areas, the ease of business in PNG is better than countries like Fiji.
“Despite the drop in rankings we are still better placed than other countries in our region,” Fleming said.