Chamber opposes devaluation

By DALE LUMA
THE devaluation of the Kina will not solve underlying issues such as the shortage of foreign exchange (forex) but requires the country to have more kina to buy US dollars which will be in limited supply.
PNG Manufacturers Council chief executive officer Chey Scovell told The National that members of the council impacted by the shortage of forex opposed any devaluation of the kina.
The devaluation idea was brought up by the PNG Business Council calling on monetary policy makers and the Bank of PNG to devalue the Kina to make exports more market-competitive.
“The fact is that a depreciation of the Kina will not fix the underlying issues,” Scovell told The National.
“While some exporters will earn some more kina, they like everyone else will be impacted more negatively than positively.
“Given Papua New Guinea has for many years had a massive trade surplus, in theory, our challenge should be keeping the value of our kina low.
“Billions of dollars are earned from selling outputs from PNG, yet so very little of those earning are coming back.
“The answer isn’t because they are waiting for the kina to devalue.
“The devaluation is a one of setback, if the consistent balance of profits came back, again we would have a surplus of dollars, hardly where we are now.
“We also don’t have any lines of investors holding off waiting for a devaluation again a devaluation won’t see more dollars coming in.
“Regardless of the conversion rate, earnings from PNG, profits, are not being repatriated.
“I am also very concerned about the capacity of our citizens, workers, informal workers and their families and relatives and businesses to absorb hefty inflation and increased costs.”