Improved World Commodity Price Outlook Benefits Papua New Guinea : PM O’Neill

Papua New Guinea Prime Minister, Peter O’Neill  has welcomed signs that the world's largest oil producers and traders are working towards ending the production issues that saw world oil slump to the lowest level in many years in January.

"As an oil and gas producing nation, Papua New Guinea is significantly impacted when the oil price is very low - and in January the world price fell to below $US30. This week price is close to $US45," he said.

"There is a vital meeting of the major production nations this weekend, and if the outcome is positive there is general agreement the world price will not slump again, and stabilize at a sustainable level.

"It remains possible uncertainty will remain, or return, but evidence that both producers and traders are after an outcome that might bring some stability to the oil price. This is well above the lows in January and February, and is most welcome.

"We need a more confident outlook in the world oil sector if we are to secure the multi billion kina investment we need to develop our second LNG export project, together with other projects that will include downstream processing and providing affordable electricity," the Prime Minister said.

PM O’Neill said the national government was carefully monitoring trends in the international LNG area.

"With major new LNG plants coming online in Australia and several other countries, the LNG market is very competitive, with obvious over-supply risks in the future.”

Mr O'Neill said Papua New Guinea was very well placed to perform strongly even in challenging times for the LNG sector internationally.

"Our first LNG exporter has won wide acclaim for the quality of the product, and the efficiency and reliability of the delivery from the LNG plant to major customers in Asia.

"It is to the enormous credit of the Exxon-Mobil led project, and Papua New Guinea, that in a very competitive environment it is really a standout. That augurs well for future exports, and for new projects.”

Mr O'Neill said there was also cause for "cautious optimism" when it came to the world price of gold and copper.

"Both world prices for copper and gold have risen since lows at the start of the year, again a trend Papua New Guinea will benefit from.

“It is now vital that the national government, working hand-in-hand with the energy and minerals sectors, brought forward to the earliest possible date the approval and construction commencement stage of projects that would create employment, strengthen construction and business, and boost national government revenues and export income.”

The Prime Minister said the rise in the world price of the key commodities Papua New Guinea produced, and exported, was a sure sign that "the corner had been turned" and there was cause for optimism about the nation's economic future.

"I appeal to the Leader of the Opposition, and other critics pursuing political agendas, to look at the facts - and stop undermining the nation's future.

"This is the time for confidence, not doom and gloom. It is a time to build on the improving commodities outlook - and work to deliver projects that will help secure the nation's economic growth that will deliver higher living standards across the nation.

"Of course challenges remain and we should always be cautious, and the world economic outlook could change for the worse again due to factors beyond our influence.

"However, recent positive trends provide us with optimism - and the government will step up efforts to bring forward approvals for massive projects that will secure our economic future," Mr O'Neill concluded.

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Experts say Papua New Guinea facing hard Economic times

Papua New Guinea is facing a difficult economic time with a growing demand on public funds.

The Institute of National Affairs’ Executive Director, Paul Barker, is blaming what he says is the Government's failure to prune the widely wasteful and poorly managed district grants.

He adds that some resource projects, including the logging companies who don’t pay taxes by claiming not to make a profit, are heavily investing in extensive real estate and other business activities.

Meantime, Rohan Fox, a Lecturer in Economics at the University of Papua New Guinea, says an analysis of the kina exchange rate suggests that if the current depreciation trend of 14.6 per cent per annum continues, the exchange rate would be 0.2788 this time next year.

This would be a rate not seen since 2003.

Business Advantage 

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Oil Palm Economic Loss

West New Britain Province and the country is estimated to have lost 4-million Kina from oil palm exports over the last six months.

This is a result of the burning down of more than 1-thousand oil palm blocks following the El Nino disaster last year.

More than 11-thousand dependents are also penny-less following the disaster.

The Oil Palm Industry Corporation Acting Project Manager, Michael Buka, says the economy loss will continue for the next two years until all oil palm trees are being replanted.

Mr. Buka says, production at the Hoskins Project dropped from 32-thousand to 27-thousand tonnes in January.

A report on the damages and loss has been completed and passed on to the Member for Talasea, Francis Marus, to assist with an economic development recovery program. NBC News / PNG Today

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Strong performance by Bank South Pacific in 2015 benefits Papua New Guinea economy

By Business Advantage PNG 

Bank South Pacific (BSP) had a strong performance in 2015. It was a bright spot for the Papua New Guinea economy. 

The Chief Executive of BSP, Robin Fleming, says the bank's profits have allowed the company to increase its dividend payments, much of which have been ploughed back into PNG's economy.

BSP, despite challenging economic conditions, reported a record profit of K531.9 million in 2015 for shareholders,' says Fleming.

'BSP is confident we will continue to achieve strategic objectives which are directed to continuous improvement of customer service outcomes and achieving growth targets and opportunities aligned to our vision.'

According to BSP's overview of its 2015 results, the bank has increased net profits after tax by 4.8 per cent to K531.9 million, despite difficult conditions in the PNG economy.

In 2015, the Bank South Pacific Group made dividend payments totaling K369.81 million to shareholders. This meant higher income for PNG's two biggest superannuation companies, Nambawan Super and NASFUND, both of which are major shareholders in BSP.

Government finances

BSP's profitability also is a positive for government finances. The bank contributes almost 10 per cent of company tax collections in PNG.

Part of the improvement in profitability has been achieved through efficiency gains. The cost-to-income ratio fell from 47.2 per cent in 2014 to 44.7 per cent in 2015, offsetting the effect of a higher cost of funds, which rose from 0.45 per cent in 2014 to 0.63 per cent in 2015.

'Customer deposits continue to grow steadily.'

Another factor has been benefits derived from increased scale. BSP has been able to grow both its balance sheet and its business. The Chairman of BSP, Sir Kostas Constantinou, says total assets of the Group increased, by approximately K2.4 billion to K18.196 billion, partially due to the acquisition of Westpac's Pacific branches in Samoa, Tonga, Cook Islands and the Solomon Islands.'

'Customer deposits continue to grow steadily-up 11.3 per cent to K14.66 billion, mainly in the retail and government segments in PNG, and in the corporate segment in Fiji,' says Constantinou. The bank has a 53 per cent market share of PNG's total banking assets, according to company statements.

Acquisitions

BSP is pursuing a regional strategy. In 2015, the bank completed the acquisition of Westpac's operations in the Solomon Islands, Cook Islands, Samoa and Tonga, with approvals also gained for Westpac's Vanuatu assets. All countries contributed to the strong profit result. BSP's Fiji operations increased profits by over 25 per cent.

Capital adequacy remains at levels well above regulatory requirements.

BSP, despite challenging economic conditions, reported a record profit of K531.9 million in 2015 for shareholders,' says Fleming.

'BSP is confident we will continue to achieve strategic objectives which are directed to continuous improvement of customer service outcomes and achieving growth targets and opportunities aligned to our vision.'

According to BSP's overview of its 2015 results, the bank has increased net profits after tax by 4.8 per cent to K531.9 million, despite difficult conditions in the PNG economy.

In 2015, the Bank South Pacific Group made dividend payments totaling K369.81 million to shareholders. This meant higher income for PNG's two biggest superannuation companies, Nambawan Super and NASFUND, both of which are major shareholders in BSP.

Government finances

BSP's profitability also is a positive for government finances. The bank contributes almost 10 per cent of company tax collections in PNG.

Part of the improvement in profitability has been achieved through efficiency gains. The cost-to-income ratio fell from 47.2 per cent in 2014 to 44.7 per cent in 2015, offsetting the effect of a higher cost of funds, which rose from 0.45 per cent in 2014 to 0.63 per cent in 2015.

'Customer deposits continue to grow steadily.'

Another factor has been benefits derived from increased scale. BSP has been able to grow both its balance sheet and its business. The Chairman of BSP, Sir Kostas Constantinou, says total assets of the Group increased, by approximately K2.4 billion to K18.196 billion, partially due to the acquisition of Westpac's Pacific branches in Samoa, Tonga, Cook Islands and the Solomon Islands.'

'Customer deposits continue to grow steadily-up 11.3 per cent to K14.66 billion, mainly in the retail and government segments in PNG, and in the corporate segment in Fiji,' says Constantinou. The bank has a 53 per cent market share of PNG's total banking assets, according to company statements.

Acquisitions

BSP is pursuing a regional strategy. In 2015, the bank completed the acquisition of Westpac's operations in the Solomon Islands, Cook Islands, Samoa and Tonga, with approvals also gained for Westpac's Vanuatu assets. All countries contributed to the strong profit result. BSP's Fiji operations increased profits by over 25 per cent.

Capital adequacy remains at levels well above regulatory requirements.

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Maipakai doubts K1 billion IMF Loan addresses PNG Economic Issues

PORT MORESBY: The government’s K1 billion loan (US$250 million) from the International Monetary Fund to address a backlog of foreign currency orders by the companies for imports has been doubted whether it will sustain the economy.

The Opposition’s shadow Minister for Finance Mark Maipakai said the businesses had a backlog of foreign exchange orders still sitting there in the Central Bank.

“The weekly order for the foreign currency is around K800 million.

“The bank only has about US$1.2 billion in the foreign reserve. Here the Prime Minister is trying to borrow US$250 million (about K1 billion). This question is how long will this money sustain our economy?” Mr Maipakai told reporters in Port Moresby today (Monday).

He said PNG was an economy, which was vulnerable to global commodity prices.

The Kikori MP has expressed concerns that the country may be asked to privatise all its assets, saying that is the price which the country must pay when entering into such a loan arrangement with IMF.

“Privatisation is looming as the international bank is only worried about guiding PNG to improve our Debt to GDP ratio to settle some of our credits.

“This is the only way we can revive the economy. The next government will be burdened to repay the debts incurred by this government,” he said.

Maipakai said the nation’s future had been mortgaged, adding ‘the future is bleak.’

“This country has gone to the dogs. There is no future for PNG,” he said.

He recalled late Bill Skate’s government which was under the same party, saying everyone knew that Skate had run down this country.

He further said his successor Sir Mekere Morauta rescued the economy by way of the International Monetary Fund’s structural adjustment.

“He had to borrow from the World Bank and IMF to revive the economy. We were asked to sell off PNG Banking Corporation and others so that is the path which now we are going down.

“All other avenues to revive the economy have failed. The last resort is we are going to IMF. There are certain conditions IMF loans have,” he said.

Meanwhile, he has commended the past government for managing the economy prudently with expenditure cuts on unnecessary areas.

“When I came into office in 2002, I was told by then Prime Minister Grand Chief Michael Somare not to buy luxury cars like VX and our salaries were cut among others.

“Our one Kina then was equivalent to US$0.21. After three years I got a back-dated payment for those I forwent,” he said in a media conference.

Mr Maipakai said they sacrificed only to bail out the economy with the delivery of only one impact project in each of the regions.

He added that these projects earned economic return for the country, saying they laid the economic foundation of the country well and delivered the LNG project.

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PM O'Neill mismanaging PNG Economy : Polye

PM O’NEILL HAS PROVEN HIMSELF THAT HE HAS MISMANAGED THE ECONOMY: THE PROVE IS HE HAS RESORTED TO US$250 MILLION IMF LOAN

The Opposition says the Prime Minister Peter O’Neill has proven that he has mismanaged the country’s economy amid his last resort to the International Monetary Fund for US$250 million loan.

“We really want to highlight some of the very fundamental facts revealed by the Prime Minister Peter O’Neill today (Thursday) at the floor of Parliament that only reflects his mismanagement of the country’s economy,” said the Opposition Leader Don Polye.

Mr Polye said the revelation was US$250 million loan.

He added Mr O’Neill has engaged the government to secure this loan to address the foreign exchange orders that are queuing in the commercial banks.

“There are other international companies which told me that they did not agree with the loan.

“I know why they do not agree because PNG’s credit rating will definitely go down to the minus. It is already in -B rating,” he said.

The Opposition Leader said that also meant the country had a debt level as high as 70 per cent.

He further said consequently the country would be struggling to repay the loans.

“That is why the commercial banks are saying they will oppose this.

“It is not because the loan is coming from IMF. IMF comes in to bail us from our government-induced cash flow problem as it our last resort,” he said.

Polye said the Prime Minister could not blame the downturn of commodity prices as he got a very bad K3 billion UBS loan, which has worsened the economic situation in the country.

“The most important aspect to take note of is the issuance of K2.5 billion Sovereign Bond.

“It has failed to attract financiers as the markets have lost confidence in the government. They cannot lend money to PNG through the issuance of the bond,” he said.

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