Pandemic affecting PNG: Bank

BANK of PNG (BPNG) is concerned that the Covid-19 pandemic is negatively affecting PNG through a decline in global trade and growth, and causing international commodity prices to fall sharply.
Governor Loi Bakani noted this in BPNG’s quarterly economic bulletin December quarter 2019, which was released on Monday.
Bakani said the latest international commodity price data published by the World Bank in April indicated a general fall in prices of PNG’s main export commodities.
“Prices for liquefied natural gas (LNG), copper and nickel declined whilst gold prices picked up reflecting investors’ preference for a safe haven investment,” he said.
“Non-mineral commodity prices for cocoa, coffee and palm oil also increased bringing some relief to PNG exporters.”
Bakani said the significant drop in some of the commodity prices had already affected PNG’s export tax revenue and foreign exchange inflows, and would continue to put pressure on the foreign exchange market.
He reiterated the importance of Government’s support to increase local production and ensure its food security requirements were at a satisfactory level to sustain domestic consumption, while reducing the country’s dependency on imports.
Meanwhile, Bakani said as of last Wednesday, the average daily kina exchange rate depreciated against all major currencies.
The kina depreciated against Australian dollar by 3.8 per cent, Euro by 3.5 per cent, Japanese yen by 2.2 per cent, US dollar by 1.7 per cent and pound sterling by 0.4 per cent.
Bakani said as of June 5, the level of foreign exchange reserves fell to K6.7 billion mainly reflecting the outflow from Government debt repayments and intervention in the foreign exchange market.
He said BPNG was committed to support foreign exchange market by providing dollars to prioritise import orders related to the pandemic.