Better times ahead on foreign exchange, says Bank of Papua New Guinea Acting Governor


September was another tough month for availability of foreign exchange in Papua New Guinea, but central bank Acting Governor Elizabeth Genia has moved to reassure business that the bank is committed to supporting the kina as it adjusts to a lower level against the US dollar. She’s also flagging better times ahead on forex.

Elizabeth Genia Bank of PNG

Acting Governor of the Bank of PNG, Elizabeth Genia. Credit: BAI/Stefan Daniljchenko

The Bank of Papua New Guinea is committed to supporting the kina as it depreciates against the US dollar, Acting Governor Elizabeth Genia told a Port Moresby Chamber of Commerce and Industry meeting last week.

‘September was a particularly difficult month for inward [forex] flows and the bank is currently looking at what can be done to assist with the intervention program through to the end of the year,’ she said. ‘The inflationary impact of a lower kina is first and foremost in everyone’s mind at the bank.’

Genia referred to the increased support the bank has given the currency this year, by increasing the amount of exchange reserves it makes made available to the market each month, from US$40 million to US$100 million, and peaking at almost US$300 million in May this year.

‘A projected slowdown in the global economy may see a decline in international commodity prices and this will affect PNG’s traditional growth sectors’

‘The message I want to send to you today is the bank is committed to supporting the kina through this adjustment phase … as we turn into the middle of 2024, we will see better times ahead.’

Specifically, she said, the final investment decision on the Papua LNG project and the reopening of the Porgera gold mine are likely to ease some of the pressure on Papua New Guinea’s foreign exchange [forex] market, by bringing more forex into PNG next year.

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Slower growth

In its latest Monetary Policy Statement, the Bank of Papua New Guinea has revised down its expectations for economic growth this year, from 3.2 per cent back in March to 2.5 per cent.

‘A projected slowdown in the global economy may see a decline in international commodity prices and this will affect PNG’s traditional growth sectors,’ Acting Governor Elizabeth Genia told an audience at a Port Moresby Chamber of Commerce and Industry event last week.

‘Inflationary pressures are on the horizon and they will continue to build.’

She said the reduced figure took into account ‘the likely impact of the delay in re-opening the Porgera mine’ on the bank’s growth forecasts.

‘In the short term, growth will be driven domestically – by the non-mineral sector – the real economy – with growth prospects picking up significantly in both the mineral and non-mineral sectors again in 2024.’

Temporary inflation slowdown

The Acting Governor was more positive on the subject of inflation, which she observed had slowed significantly this year, and is by the bank to total 3.0 per cent this year and 4.0 per cent ‘in the medium term’.

‘Headline inflation peaked above 6.0 per cent in September of last year, it eased to 3.4 per cent in December [2022] and was as low as 1.7% in March,’ she said.

‘One of the main reasons is the recent strength in the US dollar against most of the major traded currencies around the world.’

While the kina has depreciated against the US dollar by more than three per cent this year, Genia noted that the kina has been appreciating against two other key trading currencies: the Australian dollar (close to six per cent higher) and the Chinese yuan, which has contributed to lower imported inflation.

However, Genia warned that the slowdown in inflation was likely to be temporary: ‘inflationary pressures are on the horizon and they will continue to build’.

Interest rate reforms

The Acting Governor also took the time to explain how the bank was attempting to address the wide gap between the rates offered by PNG’s financial institutions for loans and deposits.

‘High liquidity – essentially, too much cash sitting with the commercial banks – has been a major issue for the Bank of PNG in implementing monetary policy and in being able to influence market interest rates.’

She said the 7-day Central Bank Bill the bank introduced in August, paying 2 per cent interest, was designed to absorb some of this excess cash and bring interest rates closer to the rates set by the Bank of PNG (the Kina Facility Rate is currently 3 per cent and is not expected to change in the next six months).

‘Our aim is to improve this situation, so that we see some level of pass through to those deposit rates as well as to lending rates.’


  1. What factors does the Acting Governor of the Bank of Papua New Guinea attribute to the anticipated improvement in foreign exchange? Greeting : Telkom University

  2. Alphonse Wapa says

    And it’s a national security issue. Fuel security is PNG national security.

    I want to rise certain points pertaining to this issue:

    1. Can Kumul Petroleum use it’s funds offshore to purchase fuel and store it in fuel farms in association with nationally owned fuel distributors like – Island Petroleum.

    2. Can Kumul Petroleum and MRDC make an arrangement with Island Petroleum,as a biggest locally owned fuel distributor, to discuss how best to address the issue.

    3.Since Australia and China are PNG’s first and second largest trading partners. Can BPNG & the government make an arrangement with the respective governments to trade with own their currencies. This practice is now being done by many other countries at the moment.
    This is instead of using the USD, inorder to preserve USD. USD can be used for trade with other countries including the US.

    That’s my thoughts on the issue of fuel shortage and forex shortage.

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