PNGBLOGS

by PAUL FLANAGAN Summary The recent IMF report indicates PNG’s international economic situation is much more frail than the picture presented by the O’Neill government. Indeed, the IMF calls the foreign reserves position ‘weak’. PNG has less than one third the recommended level in its international bank account. And this is despite the foreign exchange rationing that is hurting PNG business, investment and jobs. PNG’s published import coverage ratios are misleading and out of step with internationally accepted definitions. Specifically, PNG claims foreign reserves cover 13.0 months of imports while the independent umpire, the IMF, says the figure is only 3.2 months of imports. The suggested level for a country such as PNG is around 10 months of imports. PNG has less than one-third the prudent level. PNG says the import coverage ratio for non-mineral sector imports has increased by 28% over the last five years.  This appears to show a healthy improvement in PNG’s external