Source: The National, Thursday, April 4, 2013
CENTRAL Bank Governor Loi Bakani on Wednesday painted a rosy picture of PNG’s economy despite projections for growth to slow down from 9.2% to 4% this year.
He told The National, after addressing a Port Moresby Chamber of Commerce and Industry breakfast at the Royal Papua Yacht Club, that there was potential for the economy to grow even more if government fiscal stimulus packages were implemented.
|CENTRAL Bank Governor Loi Bakani|
He would not say what kind of stimulus packages was needed.
“In 2013, we expect the economy to grow by 4%, down from 9.2% last year, but again, 4% is still a very healthy growth this year,” he said.
“The slowdown is because of the phasing out of the LNG project, and the low commodity prices that are affecting some of our exporters.
“These two are the major ones affecting the slowing down of economic growth in Papua New Guinea, but the upside is that if the government pursues and implements the budget properly, it can offset what has slowed down as a result of LNG construction phasing out and low commodity prices.”
Bakani was unfazed by the slowing down of the economy this year.
“The economy is going very well at the moment,” he said.
“There’s potential for it to pick up even more strongly if government fiscal stimulus for the budget is implemented, rather than not being fully utilised in trust accounts or government accounts.
“It really comes down to government at national, provincial and local level
“We’re pretty much good at the moment, the economy is in good hands.
“Government is doing the right thing, focusing on rural areas and districts.”
Bakani also said that given the current high liquidity levels in PNG, and the K2.5 billion deficit, there really was no need to source funding from overseas.
“Given the high level of liquidity in Papua New Guinea, the government can rely on the domestic system to fund the deficit,” he said.
“It does not need to go overseas to international capital markets.
“If it needs to go to international capital markets, it’s forgetting some benchmark interest rates that the government can use.
“Like, for instance, the state-owned entities, if they want to go overseas to borrow, they can use that as a benchmark rate to go and borrow overseas.
“For 2013, the deficit can be funded domestically because of the high levels of liquidity we have in the system.”