PNG seeks IMF loan to ease foreign exchange problems

Papua New Guinea’s Prime Minister says the country’s central bank is trying to borrow US$250 million from the International Monetary Fund to help solve the country’s foreign exchange problems. The Bank of PNG has been restricting access to foreign currency in a bid to maintain the falling exchange rate of the Papua New Guinean kina and avoid depleting its own US dollar reserves. The move has created a problematic backlog of requests from businesses to access foreign currency for imports. PNG Prime Minister Peter O’Neill said the loan would be used to clear the foreign exchange requests of major fuel and rice companies. “The Central Bank is talking to the IMF to create a temporary facility of US$250 million, which they will bring in to make sure they pass it on to the commercial bank,” Mr O’Neill said. “Then [the Central Bank will] make sure they clear up the foreign currency backlog that we have,” he added. Mr O’Neill said the loan required the approval of PNG’s three commercial banks — Bank South Pacific (BSP), Westpac and ANZ — but only BSP had agreed so far. >