Sunday, January 10, 2016 (Sunday Chronicle, PNG)
THE Governor of the Bank of Papua New Guinea (BPNG), Loi Bakani released, this week, the final Quarterly Economic Bulletin (QEB) from September 2015, with forecasts of the continued drop in global commodity prices in 2016.
Governor Bakani noted that prices for PNG’s export commodities continue to remain low, while crude oil prices have dropped by more than 60.0 percent since June 2014.
The weighted average kina prices of Papua New Guinea exports declined by 18.3 percent in the September quarter and partly resulted in a decline of 26.1 percent in the value of merchandise exports.
The Governor reiterated that with the declining commodity prices and lower foreign exchange inflows, the kina continues to be under downward pressure.
It is projected that commodity prices will remain depressed in 2016 and therefore the Government will have to exercise restraint and prudent management of its Budget to ensure that it will base its spending on actual or realised revenues and available financing.
Bakani added also that the Government’s initiative to raise funds offshore by issuing a sovereign bond in 2016 will assist in providing some relief for foreign exchange liquidity to the market.
Lower oil and food prices and lack of demand from the emerging and developing economies associated with weak global economic activity is keeping global inflation flat.
With an extended period of low commodity prices, the Governor mentioned that the feed through from lower international fuel and food prices should offset some of the pressures arising from the depreciation of kina. The Governor urges companies to pass on the benefits of lower prices to consumers.
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