Agreeing with the central bank governor’s words on the decrease in the value of kina, PNG Institute of National Affairs’ executive director Paul Barker says this trend of depreciation is posing a big problem for fixed income earners, especially public servants in urban areas.
Mr Barker explained that the weak kina has become inflationary where prices of imported products are going higher, further resulting in higher living costs in urban areas compared to those living closer to local production areas. On a lighter note, he says that money should start flowing in now with the payment of the first LNG shipments being approved as well as the start of the coffee season coming in, enabling some stemming on this downward pressure over the next couple of months. However, he says exactly when that would start cannot correctly be pointed out at this point but if a further LNG project kicks off, construction will pick up again in late 2016 maybe for an Elk-Antelope project and would start bringing in capital for the construction phase. Switching back to the current situation, he warns that however if the kina gets too low, it will pull in other bigger problems to the economy as a whole, one of which is an increase in the cost for debt servicing.
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