High Exchange rate affects tourism in PNG

THE high foreign exchange rate in the country is making it an expensive tourist destination, a researcher says.

Professor Stephen Howes of the Australian National University said the number of tourists coming to PNG had dropped recently 

because of the high costs of goods and service brought about by the high exchange rate in the country.

“There are foreign exchange shortages in PNG which means that the Kina is over-valued,” Howes said.

“The mining boom has certainly contributed to real exchange rate appreciation, due to a stronger Kina and inflation, and this has made it more difficult for tourism.

“We see that in Australia as well as in PNG. 

“But now that commodity prices have fallen, PNG needs to look to other sources of growth.

“A lower exchange rate would make tourism cheaper for foreigners.”

According to research fellow Carmen Voigt-Graft, PNG’s real exchange rate appreciated by 43 per cent between 2005 and 2013, according to an International Monetary Fund article in 2014.

It meant that the country was much more expensive for tourists.

Voigt said holidaymakers from countries other than Australia to PNG had fallen by 30 per cent since 2008.

He attributed the drop to a number of factors, including a fall in tourism numbers because of the global financial crisis, negative publicity about the country and the Dutch Disease that PNG experienced as a result of the mining boom.

But he noted that PNG was making an effort to resurrect the tourism industry with a boost expected to come from the Pacific Games. The National/One PNG