Strong kina boosts metal, oil exports

HIGHER international prices for some of PNG’s export commodities resulted in an 11.4% increase in the weighted average kina prices last year as against the same period in 2011.
According to the Bank of Papua New Guinea (BPNG), there was a 22.4% increase in the weighted average price of mineral exports, with higher prices for gold, copper and crude oil.
BPNG says in its last year’s fourth quarter economic bulletin that the weighted average price of non-mineral exports declined by 16.0% as a result of the appreciation of the kina against the US dollar and lower international prices for all agricultural commodities, logs and marine products.
“The overall deficit in the balance of payments was K850 million last year, compared to a surplus of K1.09 billion the previous year.”
This outcome was due to a deficit in the current account, which more than offset a surplus in the capital and financial account.
“The current account recorded a deficit of K4, 061 million last year, compared to a deficit of K407 million a year ago.”
The significant deficit in the current account was due to higher net services and income payments, which more than offset a trade surplus and net transfer receipts.
The capital account recorded a net inflow of K32 million last year, compared to K73 million in 2011, reflecting lower transfers by donor agencies for project financing.
The financial account recorded a higher net inflow of K2.76 billion in 2012, compared to a net inflow of K1,526 million a year ago.
The outcome was due to inflows from portfolio and other investments in short term money market instruments by resident entities and drawdown in net foreign assets of the domestic banking system.
There was also net an inflow from foreign currency account balances of mineral companies.
These more than offset a net outflow, reflecting foreign direct investments abroad and investments in financial derivative instruments by resident entities.
The level of gross foreign exchange reserves at the end last year was K8.34 billion (US$4 billion), sufficient for 11 months of total and 15.9 months of non-mineral import covers.