‘Earn more forex through exports’

THE easy way to ensure that there is adequate foreign exchange is to earn more foreign exchange through exports than imports, an economist says.
Corinna Economic Advisory economist Saul Eslake said this during the Digital PNG Investment conference yesterday.
He said agriculture was PNG’s strength for export.
“PNG authorities need to manage the economy carefully that is through a monitoring policy on the part of BPNG (Bank of Papua New Guinea) and fiscal policy on the part of the Government,” Eslake said.
He said the country needed to focus on its strengths in agriculture and the extractive industry while building its human resource to develop those areas and to focus on nearby markets.
Eslake said there needed to be a combination of long term policies that developed the export sector and prudent management of the macro economy that ensured that domestic demand and the import demand was commensurate with the export income so the country had account surpluses to build up its foreign exchange reserves.
He said the economy needed to be developed carefully and not to be rigid in the management of its exchange rate.
“Countries that seek to run a fixed exchange rate often find themselves in trouble and having to ration excess foreign exchange where they allow the exchange rate to be misaligned with the country’s underlying fundamentals,” Eslake said.