Photo credit: Post Courtier - Benny Popoitai
Bank of Papua New Guinea (BPNG) claims that the government has to concentrate more on an export-driven strategy.
This statement on the country's current amount of foreign exchange was given by acting governor Benny Popoitai.
He said that the amount of foreign exchange reserves was $3.08 billion as of March 31, 2022. (about K10.66 billion).
“As of June 30, 2022, the gross foreign exchange reserves fell to US$3.052 billion (about K10.563 billion), mainly reflecting Government loan repayments and Central Bank interventions in the foreign exchange market,” he said in the bank’s quarterly economic bulletin for the December quarter 2021.
Popoitai asked the government to increase spending and boost export sector output, particularly in the agricultural, forestry, fisheries, and industrial industries. “Additional Government assistance to promote value-added exports, meet international export requirements and secure markets overseas would greatly assist growth in these sectors,” he said.
“The Government should focus on an export-driven strategy to boost production and exports in the non-mineral sector to increase PNG’s export earnings to support the domestic foreign exchange market and improve income for the rural people.
“If these sectors are developed, any depreciation of the Kina will have a positive impact on export revenue and growth, while minimising the impact of inflation.
“On the other hand, if the current export capacity in the non-mineral sector is not improved to respond adequately to the depreciation of the Kina, its impact will be more inflationary with a very small corresponding effect on growth and export revenue.
“Going forward, to address the on-going foreign exchange imbalance, any depreciation of the kina must be supported by relevant Government policies to address structural issues, especially to promote the export sector and minimise the impact on domestic inflation.”
Reference: The National (15 August 2022). “Focus on export strategy: Bank”.
