|Loi Bagani, Governor Bank of PNG|
There was always something a little strange about the collapsing kin. First we were told by Peter O'Neill and his corrupt cronies Marape and Pruaitch that the kina wasn't going down or that the slide was only temporary. But as we saw days of kina sliding turned into weeks and weeks turned into months, that lie no longer worked.
Today we have a clear graphical record of a slide in the kina that began nearly from the moment that Peter O'Neill was re-elected and took office again and has continued up to now. The Masters of Deception now admit this is the case but say that they've got everything under control. Most certainly not. If you look at the rate at which the kina has been declining against the US dollar in recent weeks you can see that the slide started becoming steeper than it was before. The Masters of Deception can lie all they want but the bare facts don't lie.
An outright collapse of the kina to God knows what low levels is being prevented right now by the Bank of PNG taking foreign currency and using it to buy back kina. In other...
words that foreign currency is not being allowed to be used for other purposes, and that's why there are lines of business people at all the banks, screaming that they can't get foreign currency to pay their bills and bringing in their imported goods. The foreign currency reserves aren't going up. They seem to be declining. The writing on the wall is that we are headed for a major economic calamity. Who should we thank for that? Peter O'Neill.
As we noted at the beginning, there was always something strange about the kina collapsing at this point of our history. After all, weren't we supposed to be getting rich off the sales of Liquified Natural Gas (LNG)? And wasn't all that LNG being paid for in foreign currency? Both pieces of information would argue that the foreign currency should be flowing into PNG in increasing amounts, thus making our kina rise in value.
Well it isn't all that simple. It may be that quite a bit of the LNG revenue is coming in vicurrencies other than the US dollar. That is unless ExxonMobil demands payment in US dollars which could also be the case (WHY MUST WE CONSTANTLY BE ASKING SUCH QUESTIONS WHEN SUCH STATISTICS SHOULD BE TRANSPARENT AND AVAILABLE ON THE INTERNET??).
Whatever the currency in which the LNG is being paid for, all that foreign currency coming into the country should still be getting a response from the kina value, with the kina going up. It's not happening and the big question is why not?
Now we have the answer, thanks not to the hopelessly corrupted Post Courier, National, EM-TV and other PNG media, but rather because of the Australian media and Australian reporters who have managed to get PNG and other documents on the UBS loan leaked to them so that at last the truth can be reported.
It turns out that the LNG monies are not coming into PNG. Yes, read that again. The LNG monies are not coming to PNG at all. The reason for this is Peter O'Neill and it all has to do with the always controversial UBS loan.
Peter O'Neill was advised by more than one government body not to sign that UBS loan because it wasn't in PNG's best economic interests. O'Neill ignored all the advice and all the advisors. He seemed desperate to push through the UBS loan. Thus he illegally bypassed parliament. He tried to coverup his illegal bypassing of NEC by having them approve the loan after the fact. Like the good little morons our Ministers all are, they didn't question a thing. They approved the loan but after it had already been signed and couldn't be withdrawn.
With the Sydney Morning Herald revelations of the past few days, we now can see with our own eyes that there are many reasons why that UBS loan should have never been approved. But now comes the bombshell - the loan mandates that all LNG money be held overseas in Singapore. This includes the landowner royalties. The money cannot be brought to PNG! Apparently it is all going to pay off the UBS loan but we don't have the actual facts on how the money is flowing out and how much to whom because as always the O'Neill government, followed meekly along by the Bank of PNG, isn't telling us any details. Even in a more general way, during the past couple weeks the O'Neill government and Loi Bakani, and obvious O'Neill stooge, has danced around this fact that all the LNG revenue was embargoed in Singapore without actually saying it. But now it is revealed. Without LNG money coming into PNG, there is no counteraction to the purchases of foreign money - thus, money leaving the country. The result is a declining kina.
Discerning minds out there will be asking another question. What the hell does LNG revenue have to do with the UBS loan which was used to purchase government shares in Oil Search? Simple. UBS didn't trust the PNG government to honour the loan agreement and make payments on time. They obviously had sussed out Peter O'Neill (and James Marape, and Patrick Pruaitch) accurately as being the conmen and scumbags that they really are. UBS needed secure collateral that it could get it's hands on if necessary should it look like the PNG government was screwing up its financial planning (like blowing out the 2015 budget on the Pacific Games!) and failed to make the loan payments on time. That collateral is in the form of the LNG revenue. Up to USD $400 billion in revenue can be effectively held hostage until the UBS loan is paid off.
Of course, it is the people of PNG who will ultimately suffer from Peter O'Neill's refusal to listen to anyone but his private pocketbook. The only reason why the prices of goods and service in PNG haven't started skyrocketing already is because the Australian and Chinese currencies themselves are in decline at the moment (but not nearly to the extent that the kina has been declining). Also on nearly all goods and services that we pay for in PNG, there have been cost savings that all of us have enjoyed because of lower petrol, diesel, and kero prices.
Unfortunately those buffers, just like the Bank of PNG's foreign currency reserves, are just about maxed out. When that happens, you're going to see a real collapse of the kina and when that occurs, you will wish to God above that you had woken up and actively organised everyone you knew to create a People Power Movement to push Peter O'Neill out of power. Now it's too late. We should kick him out of power, but only for the satisfaction of payback. The damage has been done and it cannot be reversed.