East Sepik Governor Allan Bird has raised the alarm about the shortage of foreign currency in the country.
He told parliament today that he received calls from 5 companies – one of them has been operating in Lae in for 40 years, employs 230 Papua New Guineans – that they have not been able to access Forex, thus resulting in the company having to cut down on working hours for their employees.
“They have K16 million in the bank, they need to pay their foreign suppliers K12 million. I am being told that there is K3 billion in orders sitting in there at all the banks,” said Bird.
Bird says he understands the LNG project ships one shipment after every three days and for one shipment, US$50 million is paid to the country; that’s a total of $9 billion a year.
He queried why the country is facing a forex crisis when the country’s economy is at its largest now.
“Today we have an economy that is three times larger than 1994, why is it that we have developed a foreign currency shortage in the last two years, and I want to know when is this going to be resolved and second, whose job is it to fix the foreign currency shortage?”
Prime Minister Peter O’Neill, in response, acknowledged the shortage of foreign currency in the PNG market, stating it was a monetary matter that is the responsibility of the central bank.
“It’s not managed by treasury or government,” said O’Neill.
Referring to the LNG exports, O’Neill said past governments have allowed exporters and project proponents, developers to park revenues oversea.
“While we have been making the exports they have been allowing them to park the proceeds overseas and money is not coming back into the country.
“We are making the exports but (this is) because agreements have been designed very unfairly for Papua New Guinea,” argued O’Neill.
He also said wrong advice from economists in fear of the Dutch disease was also to blame.
Meantime, O’Neill says the Central Bank has been doing its best to meet the day to day demands of foreign currency.
“The daily demands have been met but it’s the extraordinary payments that are causing a little bit of stress.”
He further went on to state that some big companies that have operations overseas are using revenue and profitability from PNG operations to fund losses or businesses that are not doing well overseas.
(Loop file pic)