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Bank says foreign reserves buffer world turbulence

By Eric Tapakau PORT MORESBY, Papua New Guinea (PNG Post-Courier, Dec. 30, 2009) – PAPUA New Guinea is now well cushioned from any external economic turbulence as it has up to 6 billion kina [US$2.2 billion] in foreign reserves.

New Governor of the Bank of Papua New Guinea Loi Bakani said in his Quarterly Economic Bulletin for the September quarter that this was sufficient [for] 9.8 months of total and 13.5 months of non-mineral import covers. This news comes about as employment across the country increased with many people employed to September of this year.

He said inflation declined in the September quarter but the Central Bank was mindful of the upside risks to inflation that could come from a weaker kina and excessive Government spending, especially a fast drawdown of the trust account funds, and will closely monitor these developments.

WITH the economic recovery in Australia and the consequent appreciation of the Australian dollar against the US dollar, the kina depreciated against Australian dollar and other major trading partner currencies, while it appreciated against the US dollar.Data from the Bank’s Business Liaison Survey (BLS) show that the total nominal value of sales in the private sector increased by 9.1 percent in the June quarter of 2009, compared to a decline of 12.0 percent in the March quarter.

Excluding the mineral sector, sales increased by 4.9 percent in the June quarter, compared to a decline of 14.3 percent in the previous quarter. By sector, all sectors recorded increases, except the manufacturing. All regions recorded increases, except the Islands. Over the 12 months to June 2009, total sales declined by 20.9 percent.

The bank’s employment index showed that the level of employment in the formal private sector increased by 0.6 percent in the September quarter, compared to an increase of 1.1 percent in the June quarter.

Excluding the mineral sector, employment increased by 0.6 percent in the September quarter of this year, compared to an increase of 1.2 percent in the previous quarter.

By industry, employment increased in the manufacturing, mineral, wholesale, and retail sectors, which more than offset declines in agriculture/forestry/fisheries, building and construction, transportation, financial/business and other services sectors. By region, (National Capital District) NCD, Southern, and Momase recorded increases. Over the 12 months to September 2009, total employment increased by 3.6 percent while excluding the mineral sector it increased by 3.8 percent.

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