By MALUM NALU
Papua New Guinea’s gross level of foreign exchange reserves was US$4.035 billion (K8.312 billion) as of September 25, 2012, according to the Bank of PNG, The National reports.
It says by the end of 2012, the gross foreign exchange reserves are projected to be around US$4.349 billion (K9.049 billion), sufficient for 6.6 months of total and 19.4 months of non-mineral import covers.
Governor Loi Bakani said in the bank’s monetary policy statement released at the weekend that the average kina exchange rate appreciated against both the US and Australian dollars by 8.9% and 10% to US$0.4813 and A$0.4636 respectively, between September quarter 2011 to September 26, 2012.
“The appreciation of the kina against the US dollar reflected higher foreign exchange inflows related to the PNG LNG project and foreign direct investment to the other sectors,” he said.
“The appreciation against the Australian dollar was attributed to cross-currency movements.
“The Trade Weight Index (TWI) appreciated by 8.5% during the June quarter of 2012, compared to the corresponding period of 2011.
“The Real Effective Exchange Rate (REER) also appreciated by 4.7% during the same period.”
Bakani said strong economic growth was expected to continue in 2012, with the bank predicting real GDP to grow broadly in line with the government’s forecast of 9.9%.
“This reflects the peak in construction activity of the PNG LNG project and spin-offs to other sectors, start of the production at the Ramu nickel-cobalt mine, and increased government spending,” he said.
“All sectors of the economy are expected to grow, led by the building and construction, manufacturing, mining and quarrying, commerce, financial/business/other services, and transportation/storage/communication sectors, while the petroleum sector is projected to fall due to the decline in reserves and production.
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| Work in full swing on the multi-million Holiday Inn expansion, highlighting the peak of construction activities in Port Moresby.-Nationalpic by MALUM NALU |
“For the medium term, the bank projects economic growth to moderate in 2013 and 2014, reflecting the winding down of construction of the PNG LNG project.
“In addition, domestic demand is expected to ease due to the fall in international commodity prices and, therefore, incomes.”