Papua New Guinea's economy is expected to grow by 5.4% in real term in 2022 following a muted recovery of 1.5% in 2021, according to National Budget estimates.
According to BSP’s 2021 Quarter 4 Pacific Economic and Market Insight, the 2022 National Budget and the Asian Development Bank (ADB) estimate real GDP growth in 2021 at 1.5% and 1.3%, respectively. In 2022, the PNG Government forecasts 5.4% growth underpinned by large public infrastructure spending. There is potential for further upside from election-related spending, while the resurgence of COVID and low vaccination rates in the country pose significant downside risk.
BSP Group Chief Executive Officer Robin Fleming says that, “despite a challenging 2021, BSP continues to maintain its efforts to meet the evolving financial needs of our customers.”
He said, “We have maintained funding momentum with our successful SME Credit Enhancement Scheme Loan facility, and total loans funded under the scheme now total in excess of K125m with a firm commitment from Government to provide the next tranche of K100m in coming weeks to further support this important sector.”
Mr Fleming further added that, BSP reduced the Loan equity requirement from 30% to 10%, and increased maximum loan amount from K3m to K5m to support SMEs. For Personal Loans, BSP also recently increased the maximum borrowing limit for our unsecured Personal Loan product from K50, 000 to K75, 000.”, which hopefully will result in an outcome more beneficial to BSP’s shareholders.
In relation to the Market Concentration Tax Levy introduced in the 2022 budget, Fleming noted that BSP had participated in a consultation meeting with Department of Treasury in January and looks forward to further consultation on this with Government.
“Meanwhile, with BSP branches across the Pacific, border restrictions have adversely affected GDP growth and increased public debt in tourism dependent economies. Resuming travel, safeguarding health, promoting fiscal sustainability and strengthening economic management is key to developing a resilient Pacific. Further, increasing international travel and commodity prices in 2022 bode well for economies in the Pacific region. However, the pandemic and its variants loom large over economic forecasts in the Pacific, concluded Mr Fleming.