Net foreign assets decline in 2015 last quarter

Sunday, January 10, 2016 (Sunday Chronicle, PNG) 

The net foreign assets (NFA) of the financial corporations, comprising depository corporations (DCs) and other financial corporations (OFCs), declined by 10.2 percent to K7,585.5 million in the September quarter of 2015.

This is compared to an increase of 2.3 percent in the June quarter.

It was outlined in the Quarterly Economic Bulletin released by the Bank of Papua New Guinea this week.

With central banks recent intervention in the foreign currency exchange market due to the shortfall of foreign currency supply to local importers.

This resulted from declines in the NFA of both the Central Bank and ODCs.

The decline in NFA of the Central Bank reflected its interventions to supply foreign currency in the foreign exchange market.

The decline in NFA of ODCs was mainly due to decreases in their foreign assets, including investments abroad.

Net claims on the Central Government decreased by K256.4 million to K7,685.6 million in the September quarter of 2015, compared to an increase of K648.9 million in the previous quarter.

This resulted from the retirement of Government securities, reflecting a lack of demand.

Net foreign asset (NFA) refers to the position of the country in the value of assets the country owns abroad, minus the value of the domestic assets owned by foreigners.

The net foreign asset position of a country reflects the indebtedness of that country.