Focus on export strategy: Bank

THE Government has to focus more on export driven strategies, Bank of Papua New Guinea (BPNG) says.
Acting governor Benny Popoitai made this remark in relation to the level of foreign exchange the country currently has.
He said the level of foreign exchange reserves as at March 31, 2022 was US$3.08 billion (about K10.66 billion).
“As of June 30, 2022, the gross foreign exchange reserves fell to US$3.052 billion (about K10.563 billion), mainly reflecting Government loan repayments and Central Bank interventions in the foreign exchange market,” he said in the bank’s quarterly economic bulletin for the December quarter 2021.
Popoitai urged the Government to invest more and improve production in the export sector, especially in the agriculture, forestry, fishery and manufacturing sectors. “Additional Government assistance to promote value-added exports, meet international export requirements and secure markets overseas would greatly assist growth in these sectors,” he said.
“The Government should focus on an export driven strategy to boost production and exports in the non-mineral sector to increase PNG’s export earnings to support the domestic foreign exchange market and improve income for the rural people.
“If these sectors are developed, any depreciation of the Kina will have a positive impact on export revenue and growth, while minimising the impact of inflation.
“On the other hand, if the current export capacity in the non-mineral sector is not improved to respond adequately to the depreciation of the Kina, its impact will be more inflationary with a very small corresponding effect on growth and export revenue.
“Going forward, to address the on-going foreign exchange imbalance, any depreciation of the kina must be supported by relevant Government policies to address structural issues, especially to promote the export sector and minimise the impact on domestic inflation.”