Prior to the outbreak of Covid-19, Papua New Guinea’s banking sector was healthy. Liquidity increased substantially over recent decades, with the liquid asset ratio of commercial banks growing from 40% in 2003 to 49.6% in 2017. However, the pandemic has brought substantial macroeconomic challenges throughout the world, leaving no country unaffected. Although PNG has benefitted from its geographical…
On the challenges to and opportunities in boosting the penetration rate How does the insurance sector in Papua New Guinea differ from other countries in the region? DAVID LEE: First and foremost, PNG is very rich in natural resources; however, the wider economy is underdeveloped and is therefore subject to boom-and-bust cycles. The influx of ancillary services to PNG’s energy sector generates…
In an effort to diagnose limitations across Papua New Guinea’s banking industry, a joint review team has conducted a comprehensive health check of the financial ecosystem. Following a series of intensive studies by the World Bank and IMF beginning in 2011, as well as efforts by the Department of Treasury and the Bank of PNG (BPNG), bottlenecks were identified in a handful of areas, including in capacity,…
Insurance has an important role to play in disaster and climate risk management in Papua New Guinea, helping to ease the fiscal burden of extreme events such as earthquakes and floods. Timely and predictable payouts after such events can be highly beneficial in terms of improving investor security; however, current insurance penetration rates remain low. Ring of Fire Given PNG’s location…
Despite a tight supply of foreign exchange and a slowdown in economic growth in 2018, Papua New Guinea’s banking sector remained well capitalised and registered a robust performance, aided by supportive policies from both the government and the Bank of PNG (BPNG), the country’s central bank. The successful issuance in September 2018 of the country’s first dollar-denominated sovereign bond raised…
With a low penetration rate of below 2%, Papua New Guinea’s insurance sector has significant growth potential. The economy is expected to benefit from a range of new extractive projects and this, coupled with growing awareness about the benefits of insurance coverage, is set to increase demand. However, some notable challenges will need to be addressed to ensure the long-term expansion of the industry. While…
Papua New Guinea has made strides in recent years to expand its capital markets and promote liquidity. However, the performance of the country’s stock exchange – which changed its name from the Port Moresby Stock Exchange to PNGX Markets (PNGX) in July 2019 – has been affected by a series of economic disruptions. The 7.5-magnitude earthquake that struck PNG in February 2018 contributed to a contraction…
Interview:Mark Baker What is your outlook for the banking sector and the broader economy in the near term? MARK BAKER: It will be critical in the short to medium term to initiate key projects in energy and mining. By 2026, Papua New Guinea is expected to have largely paid off the original liquefied natural gas (LNG) project. With government revenues expected to pick up by mid-2020, the medium…
Interview: Raho Samuel How will changes to the Insurance Act affect the operating environment in the insurance sector? RAHO SAMUEL: The Office of the Insurance Commissioner has engaged with the relevant stakeholders to review the Insurance Act. This underlines the strong cooperation between the regulatory office and the general insurance industry. We have identified the amendments needed to improve…
Interview:Anthony Smaré How can capital markets play a larger role in enhancing the broader economy? ANTHONY SMARÉ: Capital markets generally operate well in Papua New Guinea. This is in part due to the effective regulation of banks, which has ensured that they have a depth of capital and are able to lend to businesses and individuals. Bank loans are the first source of external capital targeted…
