The truth must prevail

MANY have grappled over millennia with that famous question of Pilate’s – What is truth?
A similar question might be on the minds of Papua New Guineans unfamiliar with the workings of modern commerce and macro economics would be a definite What is the truth?
What is the truth about the economy, foreign exchange reserves, ease of doing business, etc?
Ultimately, how is the household going to fare in the immediate future, whatever the answers to all of the above?
Naturally, the answers would be expected from the Government.  And yes, the Government has responded, and most prominently through the persons of the prime minister, the treasury secretary and the central bank governor.
Unfortunately, they have responded to the rising concerns of businesses and the public in a manner expected of them and befitting their offices – reassuring and cautious to not even raise the slightest alarm.
It was therefore refreshing for Institute of National Affairs executive director Paul Barker to explain at length the country’s foreign exchange situation.
We have given ourselves the liberty to repeat here some of Barker’s observations for the benefit of our readers.
Barker has explained that extent of the problem is far worse than many may think it is. Simply put, it is not a pretty picture and now is not the best of times to run a business in Papua New Guinea.
The foreign exchange issue is a big one affecting all businesses – as well as many households.
Barker says initially, it affected smaller, medium-sized, and particularly PNG-owned businesses and especially those such as retailers and others with a high input of foreign supplies, services and personnel provided overseas.
Larger and well-established firms with long and trusting trading suppliers and especially those that are subsidiaries of large international firms have had less difficulty.
However, it now appears from Barker’s statement that all firms are having difficulties.
A backlog of payments owing to overseas suppliers is awaiting the release of foreign currency, the American dollar mostly. And overseas suppliers simply cannot afford to offer sustained credit to PNG firms.
In a recent television interview, leaders of big business in Lae including a major manufacturer and a large agri-business have all expressed concerns about their frustrations at being unable to import because of the very tight foreign exchange situation.
Barker’s comments this week only confirm what is already a desperate situation for some of these businesses.
The banks are having to restrict foreign exchange into very small parcels (generally K25,000 which is a very small amount for a major trading firm), Barker explained.
“The recently agreed financing management for the banks, with IFC, both to provide foreign exchange and for the banks to continue to fund government’s budget deficit and for its operations, will help ease the pressure and support government operations for a short while, but it’s clearly far below the US$1bn (K3bn) sought by Government from the earlier announced sovereign bond, and its only a stop-gap.”
This is time when the Goverment should be really encouraging the development and the diversification of its economy, to generate broad-based growth and employment generation as in the Government’s own responsible sustainable development strategy .
But Barker points out that in its zeal to promote local small to medium enterprise, some of the government’s policies may undermine the prospect of investment and job creation particularly by foreign investors.
He terms such initiatives as wolves in sheep skin.
Despite the Government saying that it has the foreign exchange levels maintained at acceptable levels, businesses in particular are hoping for a massive and speedy injection of money to continue their operations.
Granted, the impact of the falling commodity prices affects not only ours but also many other bigger economies around the globe.
However, the truth of about what the Government’s management of the economy has to be made clear so that anyone who has an interest in it should know.
To cloak the truth in economic jargon and officialdom would not help the suffering public.
Eventually the truth will be out – and it will hurt some.