Banking
From The Report: Papua New Guinea 2019
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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, the country’s central bank. The successful issuance in September 2018 of the country’s first dollar-denominated sovereign bond raised $500m at a relatively attractive interest rate of 8.375%, helping to relieve some of the foreign exchange pressures, while ongoing economic stabilisation efforts supported business growth. Although commercial banks responded well to challenging macroeconomic conditions, their overall performance remains hindered by the lowest loan-to-deposit ratio of any country in the Pacific region, a consequence of PNG’s legacy of community-based mutual credit transactions. Domestic commercial banks remain well capitalised, but they are nevertheless part of a system that is under some strain. This chapter also contains an interview with Loi Bakani, Governor, Bank of Papua New Guinea; and a viewpoint from Mark Baker, Managing Director, ANZ Papua New Guinea.

Articles from this Chapter

Overview

Bright horizon: New developments are aimed at keeping pace with the rapidly changing global banking landscape
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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 $500m at a relatively attractive interest rate of 8.375%, helping to relieve some of the foreign…

Viewpoint

Starting small: Loi Bakani, Governor, Bank of Papua New Guinea, on how banks can offer tailored support to small businesses and entrepreneurs
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Viewpoint:Loi Bakani One of the main aims of Papua New Guinea’s banking sector is to foster the development of micro-, small and medium-sized enterprises (MSMEs). In emerging markets such as PNG, MSMEs play a critical role in economic growth. However, the expansion of small businesses has been slow in comparison to other countries in the region – there are an estimated 49,500 small and medium-sized enterprises (SMEs) in PNG. The government’s SME Policy 2016 aims to create a vibrant sector…

Analysis

Streamlined service: Officials address sector bottlenecks to increase capacity and bring more people into the formal banking system
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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, technology, and financial literacy and inclusion. The outcome of the review team’s work was…

Interview

Preparing new ground: Mark Baker, Managing Director, ANZ Papua New Guinea, on extending credit and facilitating growth in new economic sectors
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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 to long-term outlook is likely to be very promising. What the country does with those opportunities…

Analysis

Standard procedure: Countries across Asia Pacific roll out financial reporting regulations based on an international framework
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The banks of the Asia-Pacific region have been subject to successive waves of regulatory changes in recent years. Remaining compliant with strengthened anti-money laundering rules, know-your-customer guidelines and a raft of sustainability and transparency initiatives proved to be a resource-consuming process for the region’s lending institutions. However, one regulatory shift in particular has monopolised the attention of banks’ management and audit committees. The International Financial Reporting…