The Bank of Papua New Guinea (BPNG) Governor Elizabeth Genia addressed recent significant legislative changes to the Central Banking Act during the recent September 2024 Monetary Policy Statement presentation at the Royal Papua Yacht Club.
The amendments, passed by Parliament in September, pave the way for the establishment of a new Monetary Policy Committee (MPC) aimed at enhancing the independence and transparency of monetary policy in PNG.
“This is the last Monetary Policy Statement from the Bank of Papua New Guinea under the current governance structure,” Governor Genia stated.
“The recently passed amendments include a provision for the establishment of a new Monetary Policy Committee, comprising myself as Governor, our Deputy Governor, and three appointees who are not members of the Bank of Papua New Guinea Board.”
The new committee’s formation marks a critical step in strengthening the independence of monetary policy decision-making, Genia said.
With only the Governor and Deputy Governor sitting on both the MPC and the Bank’s Board, the committee’s membership will be determined by the Head of State, based on advice from the National Executive Committee and the Treasurer.
The appointment of the three additional committee members is expected to progress smoothly, with the aim of having the new MPC operational as soon as practicable.
“This change will facilitate more robust discussions and decision-making processes in our monetary policy framework,” she noted.
An essential aspect of the legislative amendments mandates the MPC to publish a statement following each meeting, detailing individual votes and the rationale behind decisions.
“This will add transparency to the process of setting monetary policy and provide greater insight into the considerations behind our decisions,” Governor Genia explained.
Moreover, the recent changes clarify the objectives of the BPNG, placing price stability as the primary and overarching goal.
“Our secondary objectives are to ensure financial stability; promote sustainable medium term economic growth, especially in the non-mineral and non-petroleum sector; and to promote the development of Papua New Guinea’s financial system,” Governor Genia said.
