Needed: ASOPA people from back then
No Mr Bird, PNG is not ‘printing money’

IMF & World Bank get it wrong for PNG

| Academia Nomad

WEWAK - I disagree with the position of the International Monetary Fund and the World Bank in relation to the devaluation of the kina now underway.

The IMF believes that depreciating the kina will encourage exports and assist PNG production. In fact the opposite is true.

In the last 49 years, the PNG economy has not diversified much and therefore a significant depreciation is not going to automatically result in increased production and exports.

We had a significant depreciation 24 years ago which did not result in any significant benefits. It just led to more hardship for ordinary people.

This is because PNG has not invested in the productive capacity of the economy.  It is not possible to quickly increase production.

Only the extractive sector is able to do that, but almost all of these companies are operating at peak or declining capacity.

I just saw a 10kg bag of rice increase from K50 to K56, the second price increase this year.

Depreciation is already hurting ordinary people. While some low income earners are getting a tax break, the vast majority of people in the informal sector cannot access similar assistance.

The Marape government in chasing cheap loans and having resorted to printing money may have unknowingly placed a rope around the necks of ordinary citizens.

I believe a reasonable kina trading band of around 30 US cents and 40 Australian cents is what we should be aiming for.

We must restrain government borrowings and improve fiscal discipline. We must live within our means.

We must also redirect spending not just on economic enablers but also on the productive capacity of the various sectors.

We must also look at tax incentives to encourage private sector investment to help diversify our economy.

We must decentralise our government structure as a means of encouraging spread of private sector investments. The engine room for growth is in the provinces, not in Waigani.

We must have a smaller central government that oversees provinces and doesn't compete with them.

We need to expand private sector investment and support private sector to grow both the economy and jobs. It is not government that grows the economy, private sector does that.

Too much government control, coupled with corruption is killing our economy.

The Marape government has borrowed K32 billion over the last five years but has only proven that it is incapable of growing the economy. Economic growth has lagged behind this government borrowing.

I hope all current and future leaders learn something from this grave mistake and not repeat it in the future.

We have a situation in our country where the government thinks it should be running businesses - and it fails miserably. We should focus on governing and leave business to the private sector.

It's time for a reset. Marape has taken PNG backwards by 20 years. It's time to take PNG forward.

* Allan Bird is Governor of East Sepik Province in Papua New Guinea and is seen as a likely candidate for prime minister after the next national election


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