Abel: PNG Government reviews issues that contribute to economic downturn
18 July, 2018, 3:04 pm
PORT MORESBY, 18 JULY 2018 (POST COURIER) – The Papua New Guinea government is reviewing the structural issues that contribute to economic downturn resulting in issues like shortage in foreign exchange.
Deputy Prime Minister and Treasury Minister Charles Abel told Parliament when responding to questions from former Prime Minister Sir Mekere Morauta.
Abel said it relates to the structural ways that the country has established, not just through this government but through the legacy of a lot of previous governments that has enable some of these issues to accumulate.
“One of the interesting things when it comes to foreign exchange is that it is interesting how our country continues to enjoy such a massive current account surplus which is in the order of K20 billion (US$6.1 billion) a year. What that represents is the excess of the value of what we export against the value of what we import and despite that phenomenon why we continue to discuss some of these revenue issues and foreign exchange shortage issues when we know we have all these exports happening through different sectors of the economy,” he said.
“Why has that happened, it’s not something that just occurs overnight, it’s a structural issue in terms of the way the Bank of PNG administers these arrangements through different legislations and project agreements that have been instituted by different governments.
“It’s an ongoing phenomenon and we are trying to understand, its not a simple issue that the economy has got that basic underlying shortage in terms of exports, we’ve got a massive surplus when it comes to logging and fishing and the mineral and petroleum sector as well, so the real underlying question is why our country is going through this sort of shortages and it’s not a simple answer.
“But you will find that it is actually a short term issue and as the economy begins to recover because some of the measures we are taking including reviewing how some of these project agreements are structured around foreign exchange and the benefit flows to our country to smooth those flows to give more transparency around how in cases like PNG LNG we have allowed that particular company to keep all its foreign receipts in accounts off shore will go a long way in explaining why despite large surplus we continue to suffer these kinds of issues when we shouldn’t be.
“We need a collective review on how we have allowed the structural issues to evolve, have we been taken advantage off, are we structuring this arrangements properly, we are going through each and every one of the sectors, we are trying to examine exactly what is happening to the receipts when this products are exported, when the economy starts to recover some of this issues are starting to find relief,” he said.