13 Dec 2005

Bank of Papua New Guinea boosts reserves of foreign exchange

9:18 am on 13 December 2005

Foriegn exchange reserves held by the Bank of Papua New Guinea have now reached an all-time high of US$650 million.

Governor Wilson Kamit said in his quarterly Economic Bulletin in the September quarter, the gross foreign exchange reserve was sufficient for 5.3 months of total and 7.3 months of non-mineral import cover.

Mr Kamit says the central bank eased its monetary policy stance during the third quarter of this year by reducing the kina facility rate by 100 basis points to six per cent in the September quarter from seven per cent in June.

The overall deficit in the balance of payments for the nine months to September 2005 was US$2.6 million, compared to a surplus of US$42 million in the corresponding period of 2004.

Mr Kamit said this outcome was the result of a deterioration in the capital and financial accounts, which more than offset an improvement in the current account.