Governor of the Bank of Papua New Guinea, Loi Bakani has clarified that the Central Bank has taken measures to assist those affected by the COVID-19 pandemic in the country.
He explained that BPNG will be working with financial institutions to assist those affected.
Bakani said loss of jobs means a loss of income and the Bank of PNG is working with financial institutions to help those affected.
One of the measures the Central Bank took was reduce the Policy interest rate, by 2 per cent. This led to banks reducing their base lending rates and associated rates and fees for products and services they offer, to allow customers to borrow at lower rates during this crisis period.
Another measure BPNG took was injecting liquidity with banks.
Mr Bakani explained that BPNG has reduced the Cash Reserve Requirement from 10% to 7%, which injected liquidity of around K650 million to commercial banks. He said this will ensure there is sufficient liquidity with banks for customers to withdraw their savings and borrow too.
The Central Bank has also embarked on repurchasing or buying back existing Government debt, to assist existing holders of these debt, as they will get cash.
It will also help the Government cashflow, where BPNG does the payout to holdres, and not the Government.
This debt remains in BPNG books until they mature; the Government then pays BPNG.
Mr Bakani also pointed out that the Central Bank will be making relief for loan and interest payments by financial institutions.
All financial institutions agreed to provide relief of 3 months on loan repayments and interest payments to customers who have lost jobs.
However, it will be done on a cases by case basis.
He further stated that there will be early withdrawals of members own contributions to Superfunds.
The proposed amendment to the Superannuation Act, that’s now before the NEC and the SOE Controller for approval, will allow Superannuation members to withdraw their own contributions only up to 20% or a maximum of K10,000.