Photo credit: Loop PNG - Treasurer Ian Ling-Stuckey
Papua New Guinea’s financial sector accounts for K2.3 billion of its economy in 2022, Treasurer Ian Ling-Stuckey says. Ling-Stuckey said a healthy and modern financial sector was vital for development.
“This is a larger contribution than the size of the manufacturing sector (K1.705 billion), or even our transport and storage systems (K2.05 billion),” he said.
“We must ensure that this part of our economy works efficiently.
“It needs to serve the broader public interest as it helps mobilise savings into productive investment and support for SMEs (small to medium enterprises).”
The Independent Advisory Group (IAG) is conducting a review, and the second phase has begun, according to the newly re-elected Kavieng MP.
According to Ling-Stuckey, the first phase's success prompted changes to the Central Banking Act, which were overwhelmingly approved by Parliament in December.
Robert Igara, chancellor of the University of Papua New Guinea, Sir Wilson Kamit, a former governor of the central bank, and Prof. Stephen Howes of the Australian National University are leading the independent inquiry. “International comparisons suggest there is much that can be done to improve our financial sector,” Ling-Stuckey said.
“We have some of the greatest differences in the world between interest deposit rates paid to savers and interest costs charged to borrowers.
“Fortunately, there are signs that this gap is narrowing as the Marape Government has been clear that changes are required.
“The interest rate gap decreased from 8.51 per cent in 2018 down to 6.51 per cent in 2020, the best performance since 1998.”
Ling-Stuckey said PNG’s financial sector lacked adequate competition which led to monopoly-style profit levels.
“There is a serious problem of excess liquidity in which savings are not turned into investments,” he said.
“There is a need to examine the use of technology and how it can improve access to finance and insurance for many more of our people.
“We also need to address inefficiencies in our payments system which see too many people not being able to deposit funds and too many cheques bouncing due to unnecessary and bureaucratic impositions from our financial sector.”
Public responses are being requested by IAG and are due on August 26.
Ling-Stuckey stated that the Terms of Reference had incorporated the significance of a thorough public engagement process and urged organisations and others to participate.
their opinions on how
The financial system in PNG may be strengthened.
“This is an example of the major structural reforms underway by the Government to modernise the PNG economy and lift our economic growth rate.”
Reference: The National (27 July 2022). “Healthy financial sector key: MP”.
