PNG SEEKS COMMERCIAL LICENSE FOR RURAL BANK

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MELBOURNE, Australia (Radio Australia, July 23) - Papua New Guinea's government is planning to get a license for its Rural Development bank to operate as a commercial entity.

The PNG Agriculture minister who is responsible for the nearly bankrupt bank says he is keen on assisting it to get the license from the Central Bank early next year.

Mathew Siune says the bank has been operating with low cash reserves due to past management failures to recoup over US$42 million in debt from farmers.

The government this week received an external audit report into the financial affairs of the bank by PriceWater House Coopers.

Minister Mathew Siune says it lended farmers and growers loans to start agricultural businesses but had almost gone bankrupt because loans were not repaid.

He has warned farmers and plantation owners who borrowed money but did not repay, that their plantations would be put under receivership and sold to recoup the debts. Meanwhile it had appointed new board members in a move it says'' to instill discipline and restore financial confidence in the bank's management.

But all this comes after the former government-owned licensed commercial bank - the Papua New Guinea Banking Corporation - was sold to Bank South Pacific under it's privatization program.

July 23, 2004

Radio Australia: www.abc.net.au/ra

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