Hamidian-Rad says PNG

economy picking up

PAPUA New Guinea s public sector cash flows will comfortably carry the country through to about October, contrary to earlier expectations that a financial crunch would occur during the first quarter of the year.

With this assurance, the chief govern ment econom ic adviser, Dr.

Pir o u z Hamid i a n - Rad, said mid- April that the economy was currently picking up as a result of a significant flow of export revenues from cash crops and mineral com modities.

These have helped to bol ster foreign exchange reserves for the first time

in almost a year in a trend that Dr.

Hamidian-Rad said would continue.

The Bank of PNG has reported that for eign reserves had risen to US$l3l.BO mil lion (K 311.8 million) after going down to a low of US$ 125 million late March.

Mid-April the reserves reached US$ 139.5 million and the govemmentOs cash account was K 52.43 million.

Apart from the daily receipts from import duties, sales and indirect taxes, reserves are expected to be bolstered “sub stantially” by the Mineral Resource

Stabilization Fund (MRSF) and cash crop receipts from April onwards. Dr.

Hamidian-Rad said.

He told The National that, from a cash flow point of view, the 1999 budget did not urgently require the anticipated US$ 100 million in financing from external sources

and PNG had ample time to work towards the sourcing of such funds. The govern ment has been exploring several avenues to secure external funding, including the proposed Eurobond issue of US$25O mil lion, a US$l2O million loan from the Kredit Banking Corp. of Europe and the activation of stalled talks on financial assistance from the World Bank and IMF.

“We would like to mobilise the (exter nal) financing as soon as the best terms and conditions from any of these three sources

are offered,” Dr. Hamidian-Rad said. He said many people who were talking down the economy did not seem to understand the macroeconomic situation.

Dr. Hamidian-Rad said the external financial input - when it does come later in the year - will have a positive macro-eco nomic effect by; Stabilizing the exchange rate; Further reducing interest rates; and Making credit facilities more accessible to the private sector.

He said the provision of adequate cred it to the private sector would make it more capable of carrying out public sector development programs included in the budget.

“That is why we are proceeding with the bond issue, discussions with the World Bank and IMF and the dialogue with KBC,” said Dr. Hamidian-Rad.

“This is the year of implementation, in the sense that we have to work towards implementing the budget as planned (and) not so much as carrying out a paper exer cise.” Dr. Hamidian-Rad said the govern ment was projecting a surplus of K 235 million which would be made possible by external financing. (The National) ■

PNGs public sector cash flows will comfortably carry the country through to about October