BLIND LEADING THE BLIND, WHY THE PNG ECONOMY STILL SUCKS

Elizabeth Genia, Acting Governor Bank of PNG (BPNG)

by MICHAEL JOSEPH PASSINGAN

The economy of Papua New Guinea (PNG) is at a crucial juncture. Despite some signs of recovery, the country faces several structural challenges that continue to impede its economic progress. The March 2024 Monetary Policy Statement from the Bank of Papua New Guinea sheds light on these issues, providing a comprehensive overview of the economic landscape and the policy responses being implemented to navigate through these turbulent times.

In 2023, PNG's economy grew by a modest 1.4%, a significant slowdown from the 5.2% growth witnessed in 2022. This tepid growth is largely attributed to delays in major projects and ongoing economic issues that have not been fully resolved. The anticipated growth for 2024 is around 3.0%, buoyed by the resumption of production at the Porgera gold mine. While this marks an improvement, it remains subdued compared to the potential of this resource-rich nation.

One of the most pressing challenges for PNG has been the persistent shortages in foreign exchange. This has been a critical barrier, stymieing business operations and discouraging foreign investment. Companies struggle to repatriate profits and import necessary goods, which in turn affects their ability to operate efficiently and expand. The central bank has recognized this issue and is working towards a solution through exchange rate adjustments and other monetary policy tools, but the path to normalcy is fraught with complexity and uncertainty.

The depreciation of the kina, while a strategic move to make PNG's exports more competitive, has side effects. It increases the cost of imports, thereby pushing up prices domestically — a phenomenon observed with rising inflation rates, which climbed to 3.9% by the end of 2023. The central bank anticipates further inflationary pressures as the kina continues to adjust, and this expected increase in inflation has necessitated a tightening of monetary policy, which may further strain the economy.

Global economic dynamics also play a significant role in PNG's economic fortunes. The country's reliance on exports like gold, copper, and oil means that it is vulnerable to fluctuations in global commodity prices and demand. Moreover, tightening monetary policies in other parts of the world and geopolitical tensions can lead to reduced global growth forecasts, as noted in the policy statement, which could dampen demand for PNG’s exports.

The domestic scene is no less challenging. January 2024 witnessed civil unrest that led to the looting and burning down of shops, further destabilizing the economic environment. Such incidents not only disrupt daily business activities but also deter future investment. Additionally, infrastructure deficits, particularly in power and water supply, exacerbate the situation, increasing the cost of doing business and affecting the overall productivity of the economy.

In response to these myriad challenges, the government and the central bank have embarked on several initiatives. The shift towards greater exchange rate flexibility and the steps towards restoring kina convertibility are aimed at alleviating some of the foreign exchange market pressures. Furthermore, the central bank’s decision to tighten monetary policy reflects a commitment to stabilizing prices and strengthening the economy's fundamentals.

The recovery path for PNG is laden with obstacles, but there are also opportunities. The resumption of operations at the Porgera gold mine and other similar ventures are expected to inject much-needed vitality into the economy. The central bank’s forecast of a rebound in growth rates to 4.4% by 2025 reflects an optimism that is contingent on the successful implementation of ongoing reforms and improvements in the global economic landscape.

Despite the billions in revenue from resources like oil, gold, and timber, there has been little to no improvement in the living conditions in the areas where these resources are extracted. Places like the Hela province, rich in oil, still lack basic amenities such as electricity and water. This stark disparity highlights the failure of wealth distribution and the inefficacy of development policies.

Papua New Guinea's economy is at a crossroads, facing significant internal and external pressures that hinder its recovery. The central bank’s detailed monetary policy statement provides a roadmap of the challenges and the strategies in place to overcome them. For observers and stakeholders, understanding these dynamics is crucial as PNG strives to unlock its vast potential and ensure a prosperous future for its citizens. The journey is long and fraught with challenges, but with persistent and informed policy measures, recovery and stability are within reach.

Comments

Post a Comment

Please free to leave comments.

Popular posts from this blog

HIGHLANDS FRAUD F*CKS RUNNING GOVERNMENT AGENCY,,,

Image
A Fraudster and unqualified person has been shortlisted for NEC submission for the position of CEPA Managing Director. The candidate in question is Jude Tukulyia. His academic credentials are subject to scrutiny. Further investigation is required to verify the authenticity and legitimacy of his qualifications, particularly the reported diploma in accounting, Bachelor of Laws, MBA from Divine Word and UPNG respectively. It is very suspicious and unprofessional  when the Minister for Environment Conservation and Climate Change, Hon Simo Kilepa, wrote to UPNG Vice Chancellor asking to confirm Jude’s questioned education qualifications. This very due diligence work is the core responsibility of the Public Service Commission and Department of Personnel Management. What authority does the portfolio minister have to write to the Universities? Dumbfounding indeed if one asks. Ulterior motives written all over the letter. This amounts to  Questionable Academic Qualifications of Mr Tukulyia.    
Read more

PNG, VERY RICH YET STILL A VERY VERY POOR COUNTRY

Image
by GARY MONDULAME Papua New Guinea (PNG), a nation blessed with abundant natural resources, continues to grapple with economic challenges that belie its potential wealth. The nation's economic narrative is a paradox—rich in resources yet burdened by poverty. The explanation for this paradox lies not only in economic mismanagement but also in deep-seated corruption that has permeated the political landscape since independence in 1975. Following its independence from Australia, PNG was entrusted to leaders who lacked a vision for a holistic national development. This absence of foresight is evident from the lack of long-term development plans that could have distributed the country’s wealth fairly across all regions and communities. Successive governments failed to establish foundational strategies such as building satellite townships or creating robust rural housing schemes. Instead, they resorted to short-term, reactive measures that did not foster sustainable growth. The nascent l
Read more

AUGUSTINE MANO PNG'S PREMIER CORPORATE CROOK

Image
by  MICHAEL J. PASSINGAN In a significant setback for Mineral Resources Development Corporation (MRDC), the Supreme Court of Papua New Guinea has dismissed the company's appeal to stop criminal investigations into its dealings with landowner funds held in the Pacific Balance Fund (PBF). The court ruled that MRDC's appeal was an "abuse of process" and ordered the company to pay costs of the proceedings. MRDC, a unit holder in PBF, had taken legal action against the National Court's decision to dismiss its case, arguing that the court had no jurisdiction to hear the matter. However, the Supreme Court disagreed and held that MRDC's appeal was nothing more than an attempt to interfere with the police's criminal investigative process. The court found that MRDC had no authority to conducted its own investigation into the activities of the Melanesian Trustee Services Limited (MTSL), the fund manager of PBF, and that its actions were in violation of the Trust Deed
Read more

James Marape's Missteps Openly Exposed at Australian Forum

Image
by  MICHAEL J. PASSINGAN  In a recent event that highlighted the complexities of international diplomacy and governance, Papua New Guinea's Prime Minister, James Marape, faced a challenging situation during his appearance at the Lowy Institute in Sydney, Australia. The Lowy Institute, known for its role as an independent think tank focusing on international policy, particularly in the Asia-Pacific region, provided a platform for a candid assessment of Marape's governance. Following his formal address, Marape engaged in a dialogue with Dr. Michael Fullilove AM, the Executive Director of the Institute. Dr. Fullilove, a respected figure in public and international policy, scrutinized Marape's past promises and statements, contrasting them with the current state of affairs in Papua New Guinea (PNG). The discussion took a critical turn as Dr. Fullilove revisited Marape's 2019 speech at the same venue, where Marape had outlined his vision for PNG in a speech titled “A New Boo
Read more

PNG GOVERNMENT MINISTER IN PORN VIDEO

Image
WEWAK MP AND CORRECTIONAL SERVICE MINISTER JIM SIMATAB ANOTHER PUPPET WHO NEEDS TO BE VOTED OUT Wewak Open Electorate and the people of East Sepik Province are suffering from lack of development and delivery of basic services. Meanwhile, their MP, Jim Simatab, who is also Correctional Services Minister seems to be very busy having extra marital affairs with young Tolai girls who are young enough to be his child or grandchild. He is a typical puppet in the coalition of the corrupt who needs to be voted out in 2017. WARNING NUDITY AND SEX SCENE VIDEO LINK
Read more

MARAPE & PAITA ABOUT TO SIGN AWAY PNG GOLD

Image
By: Andrew Arthur Prime Minister Hon. James Marape and his planning minister Reinbo Paita are the parties behind the theft of all Papua New Guinea’s gold for the next 100 years! They have given approval for the STATE of Papua New Guinea to sign away all gold rights to an Australian paper company in Refinery Holdings PTE LTD. First, they have done the deal with a paper company even before there is a LAW that says they have the right to do the deal. We see how the real manipulation works out. Marape and Paita now need to get the law passed by Parliament. The law is before the Parliament to set up Papua New Guinea’s first National Gold Corporation. The National Gold Corporation Bill first surfaced in 2012 but successive Government of Sir Michael Somare and Hon. Peter O’Neill, in their wisdom, had refused to pass this Bill as there have been some sinister motives and constitutional issues associated with the Bill. The new bill will allow Refinery Holdings LTD PTE to own 70% of the National
Read more