Foreign exchange inflows may be lower in 2021.
This is according to the bank of South Pacific, that said that this is due to the delay in an agreement between Barrick Niugini and the government on the Porgera gold mine.
Chief executive officer Robin Fleming said that there were several factors that would impact the availability of foreign exchange this year, including the delay in resolving dialogue on the Porgera mine.
“Resolution of the discussions between the Government and Barrick on the Porgera mine is important from a foreign exchange availability perspective with annual inflows associated with working capital for the mine having been significant,” he said. “Delays in reaching an agreement will see foreign exchange inflows being lower in 2021 than was the case in 2020.”
Last April 24, 2020, the government said that it would not renew the special mining lease of BNL. Fleming also said that the prices of oil continue to impact benefits directed to the government and other PNG LNG liquefied natural gas) stakeholders and an increase in costs above US$50 (K172.22) per barrel will have some advantage for PNG.
“Ok Tedi has been a great success story and as a wholly-owned PNG company, they continue to provide support for the foreign exchange markets and with their upgraded capacity and operating efficiency they should continue to support the foreign exchange market,” he said.
Fleming added that the project of Papua LNG with operator Total is a key factor for the positive outcome in 2021 - as well as the availability of vaccines for COVID-19. He said that businesses may not continue until the availability of these vaccines as areas such as Tonga, Fiji, Samoa, Vanuatu rely heavily on tourism.
“In PNG, the hotel sector had been experiencing oversupply towards the end of 2019 and this was made worse by international travel restrictions, hence, again the importance of a vaccine and resumption of more regular travel, which will benefit our airlines,” he said. “As business demand increases, employment increases and with a lag factor, government goods tax and services and tax revenue increases.”
