BANK OF PNG: WIPING THEIR HANDS OFF THE ECONOMIC MESS THEY ASSISTED IN

by SAM BASIL MP 
Deputy Opposition Leader

As Deputy Opposition Leader (DOL), I have continuously criticised the mismanagement of the economy by the O’Neill government and their continuous lies that the economy will recover back to pre-2012, when PNG was in a surplus budget.

My predictions on the negative high spending and reliance on oil and gas prices, from as far back as 36 months ago when the 2013 Budget was handed down, is now very real; the citizens of Papua New Guinea (PNG) don’t have to look far on the basic figureswhen they’re experiencing:

i) The high costs of goods and services acknowledging the high inflation rate that I predicted which current figures don’t acknowledge, and

ii) The rapid devaluation of our exchange rate reflecting a slowdown in the economy because-

a. The exporters aren’t getting the revenue they used to get, as well as

b. The importers awaiting their products to reach our shores because there is a lack of foreign reserves available, to pay off these products.

In all this negative economic impact we are experiencing as a result of O’Neill’s financial lies, there seems to be a silent reaperin our Reserve Bank, the Bank of PNG (BPNG), who is distancing itself from how the economy is being managed, only to pretend to be the grand saviour to what PNG can positively experience.

Their prudential guideline is that they’re independent of the government of the day so the economy can be balanced between the government’s management of Fiscal policy and BPNG’s management of Monetary policy.

But since O’Neill’s formation of the current government, BPNG seem to follow O’Neill’s instructions to the point of illegality in the form of the LG gas turbines foreign reserves purchase and the mismanagement of imposing restrictions on the trading range for the PNG Kina to the US dollar.

BPNG have further placed blockages to who is allowed to convert PNG’s currency to foreign currency, and vice versa and as DOL, I am now of the firm belief that our devaluing exchange rate is no longer determined on market forces of supply and demand for our currency, as advised by BPNG, but by the actions of the current O’Neill government.

As the lead representative of BPNG, the Governor Loi Bakani, must be held accountable for BPNG’s actions in allowing PNG’s Monetary policy to be manipulated by the O’Neill government.

The very impact of this manipulation is now reflective in the Standard & Poors rating of the country being downgraded and the lack of confidence showing in the form of the low demand of Treasury Bills and Government-Inscribed Stocks, the very same tools needed to make for a positive economy and to assist in increasing sustainable growth.

With their actions, BPNG literally closed off any opportunities of reviving the investor confidence it needed to assist in its management of PNG’s Monetary policy through their lack of managing our foreign exchange reserves and implementing restrictions on which financial institutions could exchange foreign currency, to attempt to manage what they originally mismanaged.

Since June 2014, when BPNG restricted the trading range of PNG Kina to foreign currencies, the PNG Kina has depreciated by well over 15% contradicting the very reason they did it and that was to insulate the economy from falling commodity prices and a fall in our currency.

As already quoted by PNG’s financial institutions, there is well over PGK4 Billion waiting to be exchanged into foreign currencies and with the announcement of the 2016 Budget lockdown, the shortfall of foreign exchange supply is a direct result of BPNG’s mismanagement of our foreign reserves and O’Neill’s economic management experience.

The direct impact is a decreasing Balance of Payments and a non-existent quota in our foreign exchange reserves, not to mention a major impact on importers, and the goods and services they supply that are needed to make, for an viable revenue operating economy.

With the rapid depreciation of the exchange rate, moreso in the last few weeks leading to the 2016 Budget lockdown, the Opposition can contradict O’Neill’s lies that they have the PNG’s currency depreciation under control.

This is further from the truth when intellects and reputable citizens in their long-standing positions within each industry have visible evidence through their research and statements supporting the monetary mismanagement of the economy by BPNG , through their own determinations seemingly at the request of the current O’Neill-led government.

On top of all this, is the fact that payments from the sale of the Exxon LNG project was in US dollars, and Bakani came out in August 2015, stating that BPNG did not hold an account for the LNG proceeds; he needed to say this to justify the rapid depreciation in our PNG Kina as logic would interpret that the LNG proceeds would increase PNG’s foreign exchange reserves, and an appreciation in PNG’s Kina.

The very same proceeds from the Exxon LNG project could be used to assist in improving our economy, yet they are being held in offshore accounts, purposely to be directed to pay off the high interest burden associated to the illegal UBS loan.

The BPNG Governor, in BPNG’s fiduciary independence of the current government, should’ve demanded that the proceeds be used to prop up the foreign exchange reserves but took an introverted approach of restricting companies operating in PNG to no longer hold foreign exchange accounts, thereby impacting the very ones who would assist in improving our economy to one of sustainable growth.

With my prediction of the collapse of the PNG Kina, due to in part, how the BPNG has mismanaged our Monetary policythrough being allowed to be directed by the current O’Neill government, Loi Bakani as the Governor must be partly responsible, for allowing PNG to experiencing our current economic situation that was on the verge of a surplus on every aspect of the sustainable growth to the economy .

With the change to a new government, BPNG needs to be assessed to put in like-minded people who allow BPNG to be independent in their management of PNG’s Monetary policy, and not to be manipulated by the current government of the day.

LETS SAVE PAPUA NEW GUINEA, IT IS NEEDED NOW

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