Officials reveal loan share deal signed two weeks ago, Abbott/O’Neill sign a new trade treaty and Bank PNG board happy with economy. Your weekly digest of the latest business and economic news.

Government officials say the $US1.1 billion (K3 billion) loan with Swiss Bank UBS to purchase 10.01% of Oil Search Ltd was concluded on 13 March. Meanwhile, the Ombudsman Commission says it will examine the process by which the loan was approved, while former Treasurer Don Polye has said the loan was not commercially viable and would create macro-economic instability. (For further comment and analysis, read Paul Barker’s commentary here.)

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The Australian and Papua New Guinean prime ministers have signed an economic cooperation treaty to boost trade and investment. Tony Abbott signed the deal with PM Peter O’Neill during his three-day visit last week. Abbott also said he and Peter O’Neill were looking at ways to resolve the visa on arrival issue.

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The Governor of the Bank of PNG Loi Bakani noted in his monthly report for January that, despite the high liquidity in the banking system, the kina exchange rate was stable, inflation was low and there was continued economic growth.

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State Investments Minister Ben Micah has urged Singapore’s multi-million dollar state subsidiary company Pavilion Energy to invest in PNG’s oil and gas industry. Pavilion Energy’s group chief executive Seah Moon Ming and other executives were in Port Moresby last week. Pavilion is a subsidiary of Temasek, the sovereign wealth fund of Singapore.

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Prime Minister Peter O’Neill has met with the vice-president of the China Export/Import (Exim) Bank, Yuan Xingyong, to discuss  concessional loans for road and airport projects. O’Neill said the government looked forward to working closely with the bank and was grateful for its ongoing assistance.

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The Obura-Wonenara district in Eastern Highlands is the first in the country to receive a coffee exporting licence. The Coffee Industry Corporation issued the licence, which will enable the growers to export their coffee directly overseas.

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PNG has joined the Extractive Industries Transparency Initiative which aims to combat corruption in the energy and mining industries. Greg Anderson, Executive Director of the PNG Chamber of Mines and Petroleum, notes that joining ‘comes at a critical time in PNG’s development, with the first LNG deliveries scheduled to begin in 2014.’

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The country’s first K1 billion skyscraper will be built in Port Moresby under a tax credit scheme.  Central Land Ltd will build the 32-floor multi-office complex between the dilapidated central government office complex and Moale House at Waigani.

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ASX-listed Pacific Niugini, which has mining exploration licences in four PNG provinces, has agreed to purchase up to 80% of the Halls Creek Project in Western Australia from Bulletin Resources through Pacific Niugini’s wholly owned subsidiary, Halls Creek Mining Pty Ltd. The cost of purchase is A$2.8 million.

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The Asian Development Bank has introduced a new business model in the Solomon Islands, specifically designed to take account of Melanesian culture. Eighteen ‘community companies’ have registered. Special rules also reduce the risk of corruption, by forbidding loans to directors and requiring 75 per cent agreement for the sale of major assets.

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The owner of a longline fishing fleet in American Samoa says a decision which allows large vessels a greater area to fish, is a huge relief and will mean the business can survive another year. Last year, ‘for sale’ signs went up on Longliner fishing boats, with owners citing competition from Chinese fishing vessels and a lack of government support as reasons they had to sell up.

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Finally, a report issued by ANZ this week suggests that China’s financial system could be more than twice as big as that of the US by 2030. ANZ also sees the yuan becoming the regional funding currency, and predicts the Chinese banking system will overtake the size of the US system by 2020.