The devaluation of the kina comes about simply because of the reckless economic management that now forces a desperate government to manage loan repayments in foreign currency and placate the International Monetary Fund (IMF).
This was the statement made by the deputy opposition leader James Nomane.
“Marape has implied that devaluation was inevitable and good for exports. Marape must stop lying to the people of Papua New Guinea. The devaluation of the Kina was planned – not inevitable. Although the Kina devaluation makes PNG exports cheaper, we have not invested in agriculture to increase production and export volumes that will improve our trade deficit. The devaluation will increase the cost of imports and directly increase domestic prices. The continued price increases in basic goods and services, like rice, tinned fish, fuel, water, electricity, etc, will raise inflation and make the cost-of-living crisis worse.” Nomane said.
He said that Marape has been fixated on borrowing to fund Connect PNG and other dubious investments that enrich a small group of his cronies at the expense of the nation. Further, sovereign guarantees that will not create jobs or spur economic growth have become the Marape modus operandi. For example, the dubious K2.4 billion state guarantee for a Solar-Power project in Gusap, Madang Province, without any due diligence to a K2 Singapore company.
Marape seems to imply that the Government can tell the Central Bank what to do. This inferred control is dangerous and is an affront to Sir Mekere’s exemplary reforms for total independence of the Central Bank. By melding the Treasury and Central Bank, Marape is preempting the decisions of the Central Bank in terms of interest rates and monetary policy.
He added that, the devaluation will raise inflation and the cost-of-living, lower creditworthiness, and reduce investor confidence.
“We will not attract foreign direct investment (FD) with devaluation sending the PNG economy into a spiral. The devaluation is an indictment on the Marape government, showing total incompetence, and it exposes the rot in excessive borrowing for self-interest and pressure to repay and the concomitant impact of debt on the PNG economy.
