Market still imbalanced: Baker

By DALE LUMA
ANZ PNG managing director Mark Baker says the availability of foreign currency in the country is still very challenging.
Responding to queries from The National, Baker said this was because the market was still imbalanced.
He said the demand for foreign exchange was outstripping supply which came mainly from Papua New Guinea’s commodity exporters.
“This is a structural imbalance and will only correct itself in the near term with an influx of foreign direct investment (FDI),” Baker said.
“The main source of FDI would be from the major resource projects which are still under negotiation between the government and the project sponsors. Other sectors of the economy that generate foreign exchange, such as agriculture, are currently still too small to bridge the foreign exchange gap.
“In the longer term, the solution is the development of a broader based economy where the sources of foreign currency are more varied.
“The development of a broader based economy requires infrastructure investment, in particular roads to facilitate an effective supply chain and power to facilitate a cost effective local manufacturing sector.”
Commenting on the proposed increase to taxes paid by banks, Baker said it was critical that any proposal on an increase needed to receive wide and detailed consultations, including with the banks themselves.
He said commercial banks in PNG were already among the largest and most diligent taxpayers in PNG and their operations funded private and public sector organisations.
“As with any such measures, there is the potential for unforeseen outcomes and proposed changes like these needs to be very carefully thought through,” Baker said.