The Governor for East Sepik Mr. Allen Bird is warning the government of a possible global financial crisis and that the country should start preparing for it so to deflect any further inflation in the country.
The governor, during grievance debate in parliament in the recent sitting, told parliament that some of the world’s biggest banks like the Silicon Valley Bank in the United States, went bust just recently and other notable banks like the Credit Suisse Bank in Europe is also showing signs of trouble.
He stressed that it’s not only that, but other major banks in the world are also showing similar signs and that should be the warning signs Papua New Guinea (PNG) must take note of and prepare itself for possible world financial crisis like the one back in 1997 when the Asian financial crisis began in Thailand and then quickly spread to neighbouring economies.
“We should have a mechanism that recognizes what is happening in the other parts of the world that affects us,” said Governor Bird.
“I don’t believe that we should continue to bury our heads in the sand and pretend that what’s happening in the global community will not affect us.
“My view is that we should be doing more locally, we should be increasing local production so that we can off- set some of these things happening globally, our people in the towns and cities will feel this impact.”
The governor indicated that there has to be some kind of intervention from parliament to make the economy more competitive so that it can grow.
Bird fears the knock- on effects from the banks, should the major banks in Europe, the US and Asia start to collapse, PNG will be in trouble.
“If other banks follow suit, a lot of our programs could be in trouble because were are borrowing from the world banks and we have significant debt owed to banks.”
The governor’s call now is for the government and the parliament to start looking at measures to mitigate the impacts of a possible world financial crisis should it occurs in the very near future. By adopting sound measures, a lot could be avoided like price increases and job losses.