John Sanday - Executive Chairman

John Sanday, Executive Chairman

I am pleased to present the Pacific Balanced Fund (PBF) Audited Financial Statements for 2021, a year during which the country started to recover from the impacts of the Covid-19 pandemic.

We have all had to adapt to revised working conditions due to necessary lockdowns and staff working from home, in fact even Parliament was adjourned for four months during the year. Despite the difficulties, our organisation was able to continue to function, completing a myriad of tasks which had been delayed. One of these tasks was the completion of audits of the Pacific Balanced Fund and reporting to the Fund’s members. With 2021 completed and presented herewith I now look forward to providing the results for 2022 by June 2023.

Thankfully, the domestic economy continued to recover during 2021 on the back of increases in the international prices of many of the commodities that Papua New Guinea exports. The county’s GDP dropped 3.5% in 2020 due to the Covid-19 pandemic and the World Bank predicted that the PNG economy would return to a positive growth of one percent in 2021.

The country’s abundant resource potential provides a strong platform for greater economic engagement with Asia and beyond. The economy remains dominated by two broad sectors – the agricultural, forestry, and fishing sector that engages most of PNG’s mainly informal labour force: and the minerals and energy extraction sector that accounts for most export earnings and GDP.

Economic growth in the medium term will be supported by investment in new resource projects, including the Papua LNG project, the Wafi-Golpu gold/copper mine, the P’nyang gas field, and the offshore Pasca gas condensate field. Reopening of the Porgera mine and extension of the Ramu NiCo mine will also contribute to the impending resource investment boom.

Once again PBF stands to benefit in these developments, through its investee companies, and we expect to see the value of the Fund continue to increase in coming years.

Whilst most export earnings of the country are generated from petroleum, minerals and agricultural products, the Government’s SOE Reform programme supported by the ADB and the Australian Government should strengthen performance in service industries such as power, telecommunications and air travel. These industries will in turn support the growth of the non-resource sector in the country. The Government may need to resume the Connect PNG program once the pandemic is over, while keeping the economy under control. This all comes with challenges for the country but, thanks to the PBF investments, also brings opportunities for improved returns for the Fund.

2021 is historic in that it is the twentieth anniversary of MTSL being appointed as Trustee of the Fund. The Fund itself will celebrate its 50th anniversary in 2023, having become an important part of pre and post-Independence investment funding, followed by the period in which the late Sir Mekere Morauta described as systematic and systemic as he set about the privatisation of corruption plagued State run enterprises and trusts, including the Trustee of the then depleted Investment Corporation Fund of PNG, allowing MTSL to compete for and win appointment as the Fund’s Trustee.

This appointment saw MTSL over the next two decades leading the recovery and growth of the Fund (from K73 million to its current value of nearly K600 million) and restoring accurate record keeping of the individual accounts of its 20,000 members, compliance with regulatory and legislative requirements and protecting it from the predatory behaviour which had led to its near destruction during the 1990’s.

It is with considerable pleasure that, in presenting these audited Financial Statements, I note that, over the past 10 years, the Fund has recorded an average annual growth of 11.75%. Based on these results the MTSL Board has been able to declare yet another distribution to Unit Holders. We look forward to being able to report on continuing growth in 2022 and beyond.

John Sanday
Executive Chairman

Formerly known as Investment Corporation Fund Papua New Guinea (ICFPNG)