LNG money seen to influence rates, final financing deal to determine how much dollars to stay in local economy
THE finalisation of
financing arrangements with lenders towards the PNG liquefied natural gas (LNG)
project is spreading some cloud over how the interest rates are going to
perform in the coming years. This is because the final agreement will determine
how much of the money lent would be retained in the local economy and how much
would go back overseas.
If more dollars
from the borrowings are retained in the local banking system, the play of the
existing rate would be affected. Generally, however, when the project gets
underway, the rates will increase, according to Paul Crimmins, the head of
Westpac’s relationship banking.
He said until
financial close happens, it was yet to know what would be the internal
contracts awarded to domestic and foreign companies on the US$15 billion (K40
billion) LNG project which was a US dollar denominated project.
These was part of
the discussions during yesterday’s economic outlook seminar, part of a series
of events m