Papua New Guinea’s deputy opposition leader James Nomane has accused the government of “reckless economic management” that has forced devaluation to manage loan repayments in foreign currency and placate the International Monetary Fund (IMF).
Prime Minister James Marape “must stop lying to the people of Papua New Guinea”, he said in a statement responding Marape’s message that devaluation was inevitable and good for exports.
“The devaluation of the kina was planned — not inevitable. Although the kina devaluation makes PNG exports cheaper, we have not invested in agriculture to increase production and export volumes that will improve our trade deficit,” said Nomane, a former minister in Marape’s government.
He was responding to a report by an ANZ economist forecasting that the unpegged the kina was expected to continue its depreciation until 2026. The lack of significant new foreign currency inflow was pushing down the kina’s value, with the currency already losing 2.1 percent against the US dollar since the end of 2023.
Nomane said the devaluation would increase the cost of imports and directly increase domestic prices.
Continued price increases in basic goods and services such as rice, tinned fish, fuel, water, electricity would raise inflation and make the cost-of-living crisis worse.
“Marape has been fixated on borrowing to fund Connect PNG and other dubious investments that enrich a small group of his cronies at the expense of the nation,” Nomane said.
‘Dubious state guarantee’
“Sovereign guarantees that will not create jobs or spur economic growth have become the Marape modus operandi.
“For example, the dubious K2.4 billion (NZ1.4 billion) state guarantee for a solar-power project in Gusap, Madang province, without any due diligence to a K2 Singapore company.
“Marape seems to imply that the government can tell the Central Bank what to do.”
This inferred control was dangerous and an affront to Sir Mekere Morauta’s exemplary reforms for total independence of the Central Bank.
By melding the Treasury and Central Bank, the Prime Minister was preempting the decisions of the Central Bank in terms of interest rates and monetary policy.
“Devaluation will raise inflation and the cost-of-living, lower creditworthiness, and reduce investor confidence.”
Republished from the PNG Post-Courier with permission.
This content originally appeared on Asia Pacific Report and was authored by APR editor.
APR editor | Radio Free (2024-05-08T01:34:45+00:00) ‘Reckless’ kina devaluation spells disaster for PNG, says Nomane. Retrieved from https://www.radiofree.org/2024/05/08/reckless-kina-devaluation-spells-disaster-for-png-says-nomane/
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