PAPUA NEW GUINEA GOVERNMENT ADVISED TO SECURE EXTERNAL FUNDING QUICKLY

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PORT MORESBY, Papua New Guinea (July 27, 1999 – PACNEWS)---The acting Governor of the Bank of Papua New Guinea, Wilson Kamit, has called on the government to move quickly to securing some form of external financing.

Kamit said external financing is needed immediately "to fund the budget, reduce domestic short-term debt and replenish the foreign exchange reserves at the Central Bank."

He said, "Despite the weak revenue collections and lack of draw down of external financing this year, government expenditure continued to increase, leading to the large deficit."

In a statement welcoming the Papua New Guinea (PNG) government's decision to review the 1999 budget, Kamit said the Central Bank has raised concerns over increasing domestic financing of the deficit in the first five months of the year, mainly through the draw down of the Mineral Resource Stabilization Fund (MRSF) and new treasury bills issued by the government.

Kamit said the Central Bank had advised the former government of Bill Skate to slow down or defer large expenditure items until some form of external funding was secured.

A result of these large expenditures, Kamit said, has been an injection of liquidity into the banking system, which contributed to further pressures on the Kina exchange rate.

Kamit said, as pointed out by new Prime Minister Sir Mekere Morauta, "Many assumptions contained in the 1999 budget framework should be reviewed."

He also endorsed the Sir Mekere regime's move to quickly resume discussions with the World Bank and International Monetary Fund over financial support for Papua New Guinea.

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