PNG KINA LOSES GROUND TO AUSSIE DOLLAR

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PORT MORESBY, Papua New Guinea (PNG Post-Courier, Mar. 18) - The cost of goods imported from Australia could rise if the kina continues to lose its value against the surging Aussie dollar.

That would see customers, including ordinary Papua New Guineans, "digging deeper" into their pockets to meet a possible rise in the prices of goods as most of Papua New Guinea’s imports are from Australia.

The kina has lost value from a stable A$0.40 (US$0.31) plus to around A$0.38 (US$0.30) over recent weeks - a depreciation of 5 percent.

Despite the looming threat, a spokesman for rice importer and distributor Trukai Industries said its immediate imports were not affected by the weakened kina.

The Bank of Papua New Guinea said there should not be any panic as the kina continued to lose its value against the Australian dollar.

The bank said this would only be for the time being as the seasonal harvest of agricultural exports commodities and mineral tax receipts were expected to mitigate any adverse developments on the currency front.

In contrast, the kina had appreciated slightly against the American green back.

Meanwhile, the Papua New Guinea Chamber of Commerce and Industry warned yesterday that while the Government had continued to ensure the kina maintained its stability against the United States dollar, it had not worked hard to address issues such as unplanned overseas trips, which ate away the country’s limited funds.

President Michael Mayberry said PNG needed to work out what it wanted and work towards it as the problem of rising cost would continue into the future with a population that continued to increase and the Government’s struggle to provide basic services.

"The Government is struggling to provide services and at same time there is an imbalance between money that families have and how much they want to spend," Mayberry said.

"Whatever the rise of taxes and prices will be, the people will continue to be the ones that will be affected."

BPNG Acting Governor Benny Popoitai said in the bank’s economic bulletin for the December 2004 quarter that on the back of a strong export performance, the kina appreciated against the US dollar while it remained stable against the Australian dollar.

"This had a positive effect on inflation by reducing imported inflation and insulating domestic consumers from the effects of the rise in international oil prices," Popoitai said.

"Domestic inflationary pressures were contained by the Government’s maintenance of fiscal discipline and lack of private sector borrowing."

In the first two months of this year, the kina appreciated slightly against the U.S. dollar, to US$0.3220. At end of last week, the kina was at US$0.3214.

Despite the low kina against the Australian dollar, the mining and petroleum sectors were looking at a boom this year as major companies in the sectors review their operational plans and expenditure as they discover new deposits.

March 18, 2005

Papua New Guinea Post-Courier: www.postcourier.com.pg/

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