Bank of Papua New Guinea (BPNG)

According to BSP’s Quarter 3 2023 Pacific Economic & Market Insights report, FX inflows have risen 19 per cent to K18.7 billion due to a 79 per cent year-on-year increase in BPNG FX intervention.

BPNG has supplied 20 per cent, that’s K3.8 billion, of PNG’s FX inflows this year.

BSP Group General Manager Treasury, Rohan George noted that despite increased BPNG intervention, the FX market continues to miss Porgera’s FX contribution.

The significance of this milestone traces back to the institution's establishment on November 1, 1973, when it began operations as the central bank of Papua New Guinea, under the Central Banking Act 2000.

Sir Julius Chan, who played a pivotal role in the bank's early years, marked the occasion with heartfelt congratulations.

Sir Julius, who, at the age of 34, served as the country's first Finance Minister and assumed the role of Chairman of the working group responsible for the nation's currency, fondly reminisced about the bank's inception.

BPNG has committed to urgently providing the remaining FX needed for September and October, enabling Puma Energy to procure fuel on the international market.

Puma Energy, facing looming fuel shortages, had contemplated fuel rationing to safeguard essential services and infrastructure. Grappled with substantial overdue payments, the company will actively manage declining fuel stocks while awaiting the BPNG's intervention later this week.

Since its last assessment in 2016, the international assessors will now see the effectiveness of the acts and laws put in place by the committee.

After two weeks of assessment, an overall evaluation will be given and recommendations will be made on how best to improve Papua New Guinea’s financial systems.

The implementation of the strategic plan, is the third proposal that sets out seven objectives – a responsibility of NCC and the Technical working groups from 15 different PNG institutions. 

Top five risks Papua New Guinea faces are, Illegal logging, Illegal fishing, fraud and tax evasion among others; and this strategic plan is aiming to address this issues.

Governor for Bank of PNG, Elizabeth Genia and Secretary for the Department of Justice, Dr. Eric Kwa were present to launch the plan.

The NPC is comprised of senior executives from BPNG, Financial Institutions, and the Government.

Despite the improvement in clearance times to currently two (2) days, following the launch of the Kina Automated Transfer System (KATS) in 2013, cheques are still considered a higher risk for fraudulent use and cause longer processing times and inconvenience when dishonored. The government is also shifting towards electronic payments. The use of government cheques will not be affected by this decision.

This is due to a 58 percent increase in BPNG FX intervention, according to BSP’s June Quarter 2023, Pacific Economic & Market Insights report.

“Excluding BPNG intervention, market turnover rose 12 percent in the June Quarter, but remains flat (unchanged) in 1H-2023 when compared to 1H-2022,” Rohan George, BSP’s Group General Manager for Treasury said.

He highlighted lower commodity prices as the main reason behind no growth in FX turnover. “In 2023 Palm Oil prices are down 40 percent, Oil down 20 percent, and Copper down 10 percent on 1H-2022 averages.

Chairman and Managing Director of Puma Energy Papua New Guinea, Hulala Tokome in a statement said rationing will continue in order to extend security of supply for emergency services, hospitals and critical infrastructure.

Mr Tokome said without the necessary access to sufficient FX and financial services they are resorting to rationing and managing the remaining fuel stocks.

Acting Governor for Central Bank, Elizabeth Genia, said employers who commits this offence will be prosecuted by BPNG under Section 114 of the Act.

An employer is required, in respect of each employees continuously employed for three months or more, to deduct from the employee 6 percent of the base salary and 8.4 percent of the base salary from its own funds on behalf of the employee, and remit to an ASF within 14 days of the date of the calendar month as per Sections 76 and 77 of the Act.

The request, made under its Extended Credit Facility and Extended Fund Facility, will run from March 2023 to March 2026.

The program is for budget support to assist the Government to pursue fiscal consolidation in the medium term and undertake critical reforms to help improve the performance of the economy.

This funding is tied to conditions and reforms that PNG is required to meet, defined as structural benchmarks and quantitative targets under the program to trigger drawdowns over the period.