Commodity prices to look positive in the next 18 months: BPNG Chairman

Prices of some of the countries key agricultural commodities are at record levels.

Coffee prices are at their highest points since 2022, and cocoa is at the highest price in a decade with no sign of declining.

Chairman of the Bank of Papua New Guinea [BPNG], David Toa when addressing the PNG Investment Conference in Brisbane on Monday said, the outlook for agriculture commodities over the next 18 months is very positive and encouraging, and the bank hopes to see an increase in volumes to take advantage of this and will put more kina in the hands of farmers in the country.

Mr Toa says the higher international prices also put inflationary pressure on the PNG economy.

He said the monetary policy is the tool the bank uses to fulfil its mandate of price stability but that tool has been far too blunt in PNG for far too long.

“A key reason for this is excess liquidity in the market. Simply put, the commercial banks in PNG are self-funded, and unlike in many other countries don’t rely on the wholesale market to fund their balance sheet.

“In the past year, we've introduced measures to remove liquidity from the market and make monetary policy a more effective tool for stabilizing prices,” Toa said.

He said over the following six months since March, BPNG board have envisaged a significant tightening in monetary policy and conditions to help manage rising inflation.