Photo Credit: ABC News - Loi Bakani
Policy changes in agricultural and small-to-medium companies, according to Bank of PNG Governor Loi Bakani, would boost the PNG Kina versus other currencies.
Bakani warned stakeholders at a CPA conference in Lae that the country has been missing out on a golden chance for years. He said that the value of the PNG Kina has fallen by 41% between 2012 and 2020.
The kina value versus the US dollar was as high as 0.4 toea when the PNG Liquefied Natural Gas (LNG) plant began exporting.
“When foreign exchange from PNGLNG stopped, there wasn’t sufficient forex coming in or from other mining or non-mineral sectors to sustain the appreciation of kina,” he said.
Bakani said if policies were in place to encourage the agriculture and SME sectors, import substitution and export promotion, kina would have remained stable.
“In the last two years, we’ve seen a big pick-up in the export of non-minerals, especially in agriculture, to generate a lot of forex.”
He advised stakeholders to cut imports and increase exports.
The Wafi-Golpu project, the Porgera mine, and the Papua LNG projects, according to Bakani, have the potential to reverse the trend and boost the Kina.
“This is the idea to address this shortcoming with the PNG LNG project where the government gets early revenue, the foreign exchange comes to banks and helps exchange rates to appreciate.”
Reference: The National (25 August 2021). “Bakani: Policy reforms in agriculture, SME will strengthen Kina”.
