Bank queries ‘devaluation’

The National Main Stories

By DALE LUMA
KINA Bank says devaluating the PNG currency will increase inflation and hurt the economy’s ability to grow new sectors
Chief executive officer Greg Pawson told The National any devaluation of the Kina would also affect PNG’s market competitiveness and eventually exporters who might see short-term gain from it.
The PNG Business Council this week suggested that monetary policy makers should consider trading the Kina at the market value and devalue it to make exports more price-competitive.
It said it would help businesses during the Covid-19 period.
“Kina Bank questions the validity of a devaluation of the currency,” Pawson said.
“Although, on the face of it, exports become more competitive, whether that leads to direct and substantive increases in volumes and revenue, or leads to a speedier diversification of PNG’s export industries and revenue base, is questionable.
“What is relatively certain is inflation will increase, placing pressure on interest rates, both of which may negatively impact other sectors of the economy.
“This may damage the ability to grow new sectors of the economy, as well as raise the domestic cost base. This could ultimately impact on PNG’s competitiveness, including those export industries that may see a short-term devaluation benefit.
“Offshore debt servicing will become relatively more expensive adding to the fiscal deficit, which will require further funding solutions.
“Import substitution may become more compelling in the face of rising import prices, but the capacity of PNG to move the dial on this is constrained by ongoing issues such as infrastructure constraints and low productivity.
“There is no short-term solution delivered to these issues by a devaluation.
“These issues need medium to long term solutions which are a focus of government, such as Connect PNG, and that ultimately improve the competitiveness and productivity of PNG.”
Pawson said devaluation was a complex issue that would have multiple impacts “outside of what may be only a short-term fillip to some existing export industries which are largely already doing well.”

12 comments

  • It is like there are 10 persons in one household. (Only in PNG).
    But out of that 10 people, only 1 is working. (Only in PNG).
    The other 9 are depending heavily on that 1 person. (Only in PNG)
    But to make to make things worse, 4 out of that 9 persons are also stealing from that 1 working person. (Only in PNG).
    So em bai how now? It is not rocket science for the ‘revaluation of our currency.’ We just need those 5 lazy asses to get up and work, and arrest and charge those 4 thieves as well. But the problem is, how can that 1 person kick the 5 lazy asses to work and arrest those 4??? I think the further solution is for that 1 person to try talk with 1 person in that 5. If convinced, than the 2 persons can try to convince the other 3. But note also the 4 thieves are at work too, very hard, trying to convince those other 3s to support them. Remember, if that 1 person stops working, there won’t be anyone left in that household – because there won’t any food!!!
    Food for Thought.!!!

  • They are not “revaluing” the kina, they are trying to de-value it again, probably down to 1K equal to US$0.10. Fucking prices will sky-rocket, guys. Get ready to steal from the haves and feed the don’t haves!

  • Devaluation is lowering the buying power of Kina against major currencies such as the US Dollars, AUD, euro, etc.

    Why devalue the Kina now when currently K1 = USD $0.29 or 29 US cents.

    Why devalue the Kina in the midst of COVID-19 pandemic when a lot of corporate organisations and SMEs and ordinary PNGeans are currently struggling to ends meet?

    Why devalue the Kina at this time when the global and local economies are not doing well courtesy of COVID-19 and many organisations will have negative impacts reflected on their P & L statements and Balance sheets sooner or later?

    Why devalue the Kina now??????????????????

    PNG Business Council, come out of your doldrums and explain to every learned and ordinary Papua New Guinean on the logic and long term socio-economic benefits of your proposition of devaluation of Kina!

  • We’re still going through and feeling the after-effects of the first devaluation of the kina from the 1990’s when K1 was equal to a US dollar at the time. Now looking at where the kina is, there is no need for another devaluation. People are rightly concern about this.

  • Devaluing will be short term gain but we suffer in the long run. Prices will sky rocket.
    Find out who will gain the most from this, then you know who is behind it.

  • James Marape must step down. He is taking Png down to hell. B4 anything worse happen. Do not blame cov19. He must immediately step down and let some 1 competent rule.

  • All political leaders should talk less and work. Let their actions speak for themselves. Many things in this world are easier said than done. It seems what we have now is so much media publicity, alot of noise by some leaders. Some statements made during the heat-of-the-moment during public forums should not be made without proper consideration to avoid giving false hopes and overcommitment of much needed funds. The devaluation of the kina should never be considered at all!!

  • Somebody is surely giving a very wrong advice to authorities, either wrongly or deliberately to worsen the situation and prevent our country from progressing through the development of the abundance in our natural resources. Lukaut, nogut sampla hait pawa ilaik traim long bagarapim yumi. Yumi mas sanap strong na tok nogat long displa samting.

  • We have been led to brink of collapse, further from being the richest black nation on the planet.

  • Many ways to skin a cat. Business experts look again at other alternatives. I believe there are other options than devaluation of the kina.

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