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UK - PNG
TRADE & INVESTMENT FORUM
Mark Baker
Managing Director, ANZ (PNG) Ltd
mark.baker@anz.com
24 April 2018
‘AA-’ RATED, ANZ IS A MAJOR INTERNATIONAL BANK ACROSS ASIA-PACIFIC
A presence in 12 markets across the Pacific for over 130
years
• Established in London in 1835 as The Bank of Australasia
• 46,000 staff across 34 countries
• Institutional strategy focused on Trade and Capital flows
Pacific-AsiaTrade: US$4.4b
PNGU$4bn
FijiUS$2bn
VanuatuU$368
TLU$342
SIU$300
Aus-NZ-PacificTrade: US$3.8b
Regional connectivity is playing to our unique position in Asia-Pacific
UK - PNG
TRADE & INVESTMENT FORUM
Mark Baker
Managing Director, ANZ (PNG) Ltd
mark.baker@anz.com
24 April 2018
KINA / USD PEAKED IN MID 2012 – PNG LNG PROJECT BUILD
0.30
0.33
0.36
0.39
0.42
0.45
0.48
0.51
Aug 11 Aug 12 Aug 13 Aug 14 Aug 15 Aug 16 Aug 17
PGK/USD
• From 2003 – 2007 PGK/USD ranged in high .20s to low .30s
• Final Investment Decision for PNG LNG was in 2009
• Construction 2010-2013
RESOURCES: build wealth,
activity and skills
INFRASTRUCTURE: underpin attractive
business opportunities
AGRICULTURE: enable stabilising,
broad based development
• Avoid resources curse by productive investment
• Source of demand for entrepreneurs
• Avoid resources curse– lower exchange rate– income stabilisation
• Supply chain backbone
• Baseloaddemand
• Investment and technical skills
• Infrastructure prioritisation
Links between sectors
BALANCED DEVELOPMENT WILL ALLOW HIGH-QUALITY GROWTH
SOFT COMMODITY PRICES HAVE ADVERSELY IMPACTED PNG
GDP driven by external factors:
• Commodity prices
• Foreign Direct Investment
Forecasted to grow by 2.4% in 2018.
Fiscal: According to the 2018 Budget report the government expects a deficit of PGK1.987 bn or 2.5% of GDP with the debt to GDP ratio moving to 32%.
Inflation: Increasing by 1.0% to 6.9% with upside risks if PGK depreciation accelerates
FX Reserves : US$1.71Billion with some reductions possible as reserves are used for FX intervention.
Interest payments as % of GDP
Source: PNG Treasury, ANZ Research
SERVICING OF GOVERNMENT DEBT
0
1
2
3
4
5
6
1998 2001 2004 2007 2010 2013 2016 2019 2022
%
Forecast
0
5
10
15
20
25
1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022
%
Forecast
Interest payments as % of Revenue
UK - PNG
TRADE & INVESTMENT FORUM
Mark Baker
Managing Director, ANZ (PNG) Ltd
mark.baker@anz.com
24 April 2018
FOREIGN EXCHANGE ISSUES WILL NORMALISE OVER THE MEDIUM TERM
• PNG Kina is a thinly traded currency and subject to supply/demand pressures
• Onshore USD liquidity currently limited due to fall in commodity prices and volumes, against strong import demand.
• Situation will ‘normalise’ once USD inflows from new resource projects materialise.
• In the longer term (post 2020) the market will be better balanced.
• Sovereign Wealth Fund legislation provides the mechanism to manage currency issues
UK - PNG
TRADE & INVESTMENT FORUM
Mark Baker
Managing Director, ANZ (PNG) Ltd
mark.baker@anz.com
24 April 2018
PNG - THE MEDIUM TO LONG TERM FUTURE
• PNG’s long term potential is undoubted.
• The PNG LNG project shows that a world scale project can be completed successfully, with leading project economics
• ANZ’s medium term view (2 years +) is positive, driven by LNG and other resource investments
• Infrastructure to be the key enabler to drive growth higher and broader over the medium term.
UK - PNG
TRADE & INVESTMENT FORUM
Mark Baker
Managing Director, ANZ (PNG) Ltd
mark.baker@anz.com
24 April 2018
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