HIGH INTEREST RATES BLAMED FOR BUSINESS WOES IN PNG

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PORT MORESBY, Papua New Guinea (September 25, 1998 - Radio Australia)---The head of one of Papua New Guinea’s biggest companies, Steamships Trading, has predicted that some PNG businesses will not survive unless interest rates fall soon. Interest rates in Papua New Guinea have shot up to as high as 26 percent, as the government tries to protect the value of the currency, the Kina.

Speaking about his company’s first half profit, Steamships’ Managing Director, Christopher Pratt, said 1998 has probably been the most difficult year for the PNG private sector since independence. Record high interest rates and a weak and volatile Kina increased uncertainty and costs, he said.

He doubted whether some businesses would survive.

"We could see several companies fail," Pratt predicted. "Any businesses that have heavy reliance on debt finance will find it tough to survive if these rates persist for any length of time. It is inevitable."

Mr. Pratt said Steamships had delayed capital spending because it was not prepared to borrow with interest rates so high.

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