Papua New Guinea’s economy can be further bolstered if a number of initiatives are implemented now by the Government to set the foundations for growth in the next 3 to 5 years, says Kina Bank.
Speaking at the PNG Resources Summit on Thursday 04th July in Port Moresby, Kina Bank Executive General Manager – Treasury and Financial Markets, Nathan Wingti, told delegates at the conference that the numerous challenges the country has faced in the last 10 years, particularly with foreign exchange shortages and growing inflation, “will not end anytime soon, but we do see foundations being laid for the economy to take off, if done properly”.
“Firstly, in the resources sector, the projects that are in the pipeline such as the Wafi Golpu, Papua LNG and Pasca should be expedited into the construction phase starting 2025. This should be done by striking a balance by promoting nationals in business and professions while allowing investor certainty and confidence,” Mr Wingti said.
“Secondly, in terms of government policy interventions, the IMF program to support budget and reforms in monetary policy will be critical, particularly in the realignment of foreign exchange. Considerations could also be done to free up fiscal revenues especially with government commitments to PNG LNG financiers.”
He added that the Connect PNG Infrastructure program also has the potential to stimulate economic growth if done correctly to boost productivity and can help ease pressures on the cost of living.
“The National Census is also a critical program for forward planning. If the economy does take off in the next 18 months with the predicted 8 year duration of the construction of the resource projects, long-term policy planning, especially population data will be even more critical.”
Meanwhile, Mr Wingti stated that according to the Bank of PNG, while inflation is expected to remain elevated in 2024 at around 5.0%, it should slow down in 2026 with planned completion of the current exchange rate adjustment.
“Inflation will remain elevated in 2024 due to several factors such as the removal of fuel subsidies in 2023, the continued nominal PGK exchange rate depreciation, and the increased Government spending and its impact on liquidity and import demand,” he added.
“In terms of the outlook, we still see the PGK/USD depreciating simply because there is no major demand for Kina in exchange for foreign currency. This issue has been long-standing for some time since 2011 and will continue until large foreign currency inflows start: possibly through the construction phase of a new resource project.”
