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Medium-term outlook remains optimistic

Wednesday, May 3, 2023

Medium-term outlook remains optimistic, but is dependent on timely commencement of resource projects

“Business sentiment is robust following the announcement of the Papua LNG project reaching the front-end engineering and design (FEED) phase and Porgera’s resumption progress announced by Barrick CEO in early April,” according to the BSP Quarter 1 2023 Economic Insight report.

BSP’s Group General Manager for Corporate, Peter Beswick said, “Papua LNG’s final investment decision (FID) is expected to be reached in late 2023 or Q1 2024. This will deliver substantial opportunities through local content for landowner and PNG companies … either directly, or through Joint Ventures, with global engineering, procurement and construction contractors.”

Mr Beswick said, “On the downside, delay of Porgera’s resumption will prolong distress with FX supply over the short-term” further adding that “total foreign currency reserves fell from US$4.1b in 31st December 2022 to US$3.9b, as at 29th March 2023, due to government debt repayments and increases in BPNG FX intervention.”

“BPNG states that IMF funding of US$918.2m over the next three years for budget support, will have minimal effect on BPNG’s international reserves, due to increases in intervention and Government debt repayments,” adding that medium-term outlook remains optimistic and will be dependent on timely commencement of the resource projects (Porgera, Wafi-Golpu, P’nyang, Twinza),” said Beswick.

Beswick noted that, “inflation still remains a primary concern for BPNG, businesses and consumers”. However he added, “Inflation is expected to recede in 2023 compared to last year, as lower global output, improvements with supply chain and lower commodity prices, especially on fuel, are to contribute to lower price pressures”.