Banking
From The Report: Papua New Guinea 2020
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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 isolation in terms of public health, its economic recovery will be highly dependent on international commodity prices, from where it receives the majority of its foreign currency. Nevertheless, the banking sector remains resilient due to the strength of key market players and decisive action on the part of policymakers. Ongoing policy initiatives to address spatial and social inequalities will prove crucial to the sector’s long-term objectives, as will efforts to boost digital penetration and financial education. This chapter contains interviews with Loi Bakani, Governor, Bank of Papua New Guinea; and Ian Tarutia, CEO, National Superannuation Fund.

Articles from this Chapter

Overview

Maintaining stability: Efforts are under way to improve financial inclusion and offset the impact of the global Covid-19 pandemic
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The Covid-19 pandemic has brought substantial macroeconomic challenges throughout the world, leaving no country unaffected. Although Papua New Guinea has benefitted from its geographical isolation in terms of public health, its economic recovery will be highly dependent on international commodity prices, from where it receives the majority of its foreign currency. Nevertheless, the banking sector remains resilient and liquid due to the strength of key market players, as well as decisive action…

Interview

Support measures: Loi Bakani, Governor, Bank of Papua New Guinea (BPNG), on minimising risk and maintaining economic stability
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Interview:Loi Bakani How can the banking system minimise vulnerability to shocks related to Covid-19? LOI BAKANI: Macroprudential policy remains the first line of defence for the banking system. There needs to be greater focus on systemic risks and a shift away from traditional, idiosyncratic policies. Countercyclical capital buffers, as well as other cyclical and structural macroprudential policies, are becoming increasingly necessary. Narrowing the coordination gap between macroprudential…

Analysis

Small but mighty: The government is pursuing ambitious plans to develop local entrepreneurship to boost employment and growth
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Small and medium-sized enterprises (SMEs) in Papua New Guinea currently generate 0.8% of exports and account for 6% of GDP. However, policymakers see substantial opportunities in providing these smaller companies with enhanced institutional and financial support. Indeed, the government estimates that SMEs have the potential to generate more than half of formal sector employment and contribute 50% of the country’s GDP by 2030. GovernmentPlanning Nurturing the growth of SMEs forms…

Interview

Full potential: Ian Tarutia, CEO, National Superannuation Fund (nasfund), on boosting membership and supporting the economy
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Interview:Ian Tarutia What is the optimum balance between Papua New Guinea and overseas investments for superannuation funds in 2020-21? IAN TARUTIA: The best strategy for superannuation funds in the short term would be a defensive posture and an inclination towards holding a very liquid portfolio in cash. This will be essential because we will need to pay unemployed members who lost their jobs as a direct and indirect consequence of the Covid-19 pandemic. Moreover, investment opportunities…