Prime Minister Hon. James Marape has said today the Department of Treasury and Central Bank are closely monitoring the depreciating Kina to ensure it does not trigger extraordinary inflation, with Government standing by to intervene in an emergency.
Prime Minister Marape was responding to a report by ANZ Bank foreign exchange insight researchers, economists Kishti Sen and Tom Kenny, published in the media today on the depreciation of the Kina since May 2023
He said, “The Kina was artificially pegged in 2014, probably with good ntentions to maintain its value. But over time, it became a demotivation for importers to bring back their export earnings as the Kina became more expensive and not on its fair market value.
“We have now unpegged it, and Treasury and Central Bank are observing closely to ensure the depreciation of the Kina does not trigger extraordinary inflation over our 2024 inflation focus.
“If it does, we will intervene.”
The Prime Minister said Independent Consumer & Competition Commission (ICCC) and Central Bank are continuously assessing the impact of the depreciating Kina, while Government was working with all exporters in Agriculture, Fisheries, and Forestry as well as mining and petroleum companies to return their export earnings to the country.
“Last year, we made well over K60 billion in exports but the return to our economy was much less. If all our exporters brought back to PNG a major portion of earnings, if not all, then the Kina will appreciate.
“We are working on tidying this, and Central Bank has been asked to look at ease of investors holding US Dollar accounts and for ease of them accessing their own funds.
“On that note, I want to appreciate Barrick Gold – our partners in New Porgera – for their commitment to remit a minimum of 51 percent of earnings from Porgera,” said PM Marape.
The Prime Minister said Government has been working with investors to bring in capital from Foreign Direct Investment in both exploration and construction, while work is continuing to get the next mining and gas projects up and running.
“ExxonMobil, TotalEnergies and Santos each have over $100 mil-lion exploration programs running this year; they will also maintain spending in pre-Papua LNG FID.
“We progressing the small Pasca condensate project that would be 50 percent owned by MRDC for Gulf and 50 percent owned by investors. By this year SML for Wafi-Golpu should be issued to kickstart construction.
“All these FDI are for this year and next year, as we head to meet the big construction of Papua LNG, and later P’nyang LNG and Wafi Golpu mine,” he said, adding that PNG’s agriculture, forestry and fisheries exports have been steadily improving which would assist boost the Kina.
He said if any urgent needs arose out of this current situation, Government would make interventions to families, businesses and investors, as it has continuously done over the last couple of years.
“Our government is on record for giving the biggest relief assistance to support the economy and our people’s livelihoods in re-moving taxes for certain work bracket and paying more in school fees. We will continue to intervene.”
The Prime Minister said for the long-term address of Forex and oth-er structural issues in the PNG economy, allowing the Kina to float on its own strength was bound to happen.
“I want to assure everyone that we are conscious of the domestic impact of a depreciated Kina, especially its effects on our small, import- dependent economy. I do not want the burden of this to be passed onto store shelves to affect our people further, so we are keeping a very close watch,” said Prime Minister Marape.