Treasurer told to find solutions on devaluation of Kina and address high cost of living

Deputy opposition leader James Nomane today in Parliament raised a series of questions to Treasurer Ian Ling-Stuckey in regard to the current state of the economy.

Nomane who has been vocal on the devaluation of kina amongst other key economic agendas asked Ling-Stuckey to outline what the government was doing to address this issue.

He said drop in value of kina has contributed enormously to the vast increase of living cost in the country as basic household goods have become expensive to purchase.

“The whole country is aware that we have currency in free fall, the devaluation of the kina. And this has continued to exacerbate the cost of living crisis,” the Chuave MP told parliament.

“Inflation is still high. An average Papua New Guinean cannot afford the price of tinned-fish and rice.

“So, my question to the Treasurer is, what is he doing about this devaluation of the kina? When will it stop? And when will he start to effectively tell the people of Papua New Guinea how he is going to reduce inflation,” he asked.

Treasurer Ling-Stuckey said the kina has not devaluated, comparing the exchange rates to the US and Australian dollar since April 2023.

He said there was a controlled depreciation on the valuation of the kina to deal with foreign exchange issue through IMF, with exchange rates for Australian dollar at 0.4296 and 0.2840 for US dollar.

The Kavieng MP said at the start of this month, the rate now sits at 0.2568, a drop of 9.6 per cent of the kina, compared to April 2023 where it was at a percentage of 12.2.

“The kina is not in free-fall, the kina is being treated as part of a two-pronged approach to deal with our foreign exchange problem,” he said.

“The kina is not devalued and devaluing, the kina is depreciated.”

Ling-Stuckey affirmed that government was taking a similar approach to the debt issue where the forex matter will be dealt with a 13-year budget-prepared plan. He said they would be using a two-pronged approach to solve the matter.

The short-term plan is a 50-step pathway that is to be implemented by the Central Bank and with technical support provided by the IMF,” he said.

“The long-term plan, which we hope to announce shortly after endorsement from both the IMF and the World Bank, is one that falls under fiscal reforms or microeconomic reforms and that is one to grow the economy.”

The Treasure admitted that there was not enough supply of foreign exchange to meet the demand. But he said the government will depreciate the value of the kina over a short-term period as an alternate solution.

Despite MPs obviously echoing the expensive living cost faced by average Papua New Guineans, Ling-Stuckey said the government has already placed a living-cost budget to assist people.

“We have made permanent reduction in the taxes, families pay for their fortnightly wages, making it now permanent that any citizen in our country that earns up to K20,000 per year or K769 per fortnight,” he said.