In a strong rebuttal to the Bank of South Pacific’s recent prediction of an 8.5% annual devaluation of the Kina, Treasurer Ian Ling-Stuckey emphasized the need for a more measured approach to currency adjustments.

 “As Treasurer, I disagree strongly with any 8.5% annual devaluation. This figure exceeds what I believe to be appropriate, and we must address our foreign exchange shortages in a balanced manner,” he stated.

The Treasurer clarified that the forecast of an 8.5% depreciation is not representative of government policy but reflects the views of a private sector bank.

“I must be cautious in sharing information due to its commercially sensitive nature; however, I can assert that the central bank is not working towards such a high devaluation,” he added.

The Treasurer attributed some of the economic pressures to global inflation, projected at 5.8% for 2024, and reiterated the government’s commitment to achieving a fully convertible Kina.

“Addressing foreign exchange shortages is of paramount importance. Feedback from PNG’s CEOs indicates that these shortages are hindering job creation, investment, and economic growth, surpassing challenges related to law and order, unreliable electricity, and red tape,” he noted.

To tackle these issues, the Treasurer outlined a comprehensive 50-point plan aimed at monetary and foreign exchange reform, which complements broader economic strategies, including a deflationary budget policy, increased export focus, and measures to encourage foreign investment. “We are also exploring options to ensure that more foreign exchange is either returned to the country or remains within its borders,” he added.

Additionally, Ling-Stuckey addressed criticisms regarding the independence of the central bank. “Critics often highlight the importance of independent monetary policy from the Sir Mekere era. Yet, they also expect the government to intervene when decisions do not align with their views. The responsibility for currency devaluation rests with the central bank, which is not planning to follow the aggressive trajectory suggested by one private bank,” he explained.

He warned against political hypocrisy, recalling that some opposition figures previously advocated for a more drastic 20% immediate devaluation of the Kina. He cited Deputy Opposition Leader Douglas Tomuriesa’s comments from February, showcasing a stark contrast in approaches to economic reform within the political landscape.

“Economic reform is challenging and opinions will vary. While we respect our central bank’s independence, the Marape-Rosso Government is determined to work tirelessly within the constraints of international markets to address our foreign exchange shortages.”