Economy depends on FX: Barker

A GENERAL economic malaise has undermined export earnings and increased an imbalance of foreign exchange for the country, says Institute of National Affairs (INA) executive director Paul Barker.
Barker told The National that there had been an increase in foreign currency reserves and the level of demand due to the Ukraine-Russia conflict which had seen energy prices increase.
He said improved access to foreign exchange (forex) and a shift to a more market driven exchange rate system would contribute to some enhancement in the country’s business outlook.
He said, however, that a range of measures and actions had tended to add to business insecurity and disruptions.
“These are related to resource project decision-making, and measures such as the market dominance tax, which has a limited rationale with respect to encouraging competition, but does add major operating costs on wide sections of the economy.”
He said a shortage of accessible foreign exchange had been an issue for several years.
Barker said since 2015, the fall in commodity prices, particularly for oil and gas, coincided with major increased public and private foreign debt.
He said some reprieve was provided through improved commodity prices and increased production and export earnings in 2018 but the fall in commodity prices associated with the Coronavirus (Covid-19) pandemic in 2020, the closure of the Porgera mine and general economic malaise undermined export earnings and increased the imbalance in foreign exchange receipts, despite the continued strong trade balance.
Barker said global economic conditions contributed to some ongoing uncertainty, along with the political uncertainty provided by elections in several countries.