‘Domestic credit sounds better’

Caption: The NDB’s Moses Liu says defaults have only slightly worsened.

THE Businesses in Papua New Guinea may be finding it hard to get foreign exchange, but credit quality within the domestic economy remains relatively healthy. Finance executives and analysts said they are seeing only slight signs of deterioration, despite the weak economy.

Moses Liu, Managing Director of PNG’s National Development Bank, says he has not observed credit quality changing substantially, although he says ‘there has been a slight increase in the defaulting accounts last year and this year, due to the depressed state of the economy.’

Bruce Mackinlay, Managing Director of the industry-funded credit organisation Credit & Data Bureau, has likewise not detected any significant deterioration. He said that receivables in kina ‘may be creeping up slightly,’ but adds that it ‘does not present a huge problem, at least for us.’

However, Mackinlay detects a growing interest in the checking of credit quality in PNG, pointing to growth in ‘membership activity’ in the Bureau, which maintains a database of credit history in PNG and the Solomon Islands.

‘There is, and there has been, significant liquidity in the system for some time.’

‘Credit history checking will probably average over 20,000 per month this year,’ he says.

‘Default uploading continues to be steady; and member recoveries continue to grow. It is now over K241 million.’

David Kelso, Managing Director of Moni Plus, believes one reason credit quality within PNG has remained reasonably strong is the lack of availability of foreign exchange.

‘There is, and there has been, significant liquidity in the system for some time—which is consistent with the lack of foreign currency to pay for imports.’

Kelso notes that ‘loan assets that are reliant on government/public sector cash flow are under stress.’

But he believes that the most of the economy is coping with the weaker economy.

Leave a Reply

Your email address will not be published. Required fields are marked *