Air Niugini Resumes Fokker Jet Operations to Rabaul

A recent statement by economist Paul Barker has shed light on the implications of a weakening Kina for Papua New Guinea's economy. Barker, the executive director of the Institute of National Affairs, emphasized that the depreciation of the Kina adds to the costs of imports and increases the burden of servicing both public and private overseas debts.

Barker pointed out that while imports are crucial for traders and consumers, they also play a significant role in business operations, including those of exporters who rely on imported plant, equipment, and international salaries. He noted that urban areas in Papua New Guinea are becoming increasingly expensive, placing a strain on individuals with fixed or lower incomes who are already facing high costs for essential goods such as rice and protein sources.

Conversely, Barker highlighted that a weaker Kina could benefit exporters. This situation may indirectly support the majority of the population involved in agriculture and encourage the substitution of imports with locally produced goods or processed items. Despite these potential benefits, Barker cautioned that Papua New Guinea would need substantial reductions in costs to compete effectively with major producers in East and Southeast Asia. Challenges such as high transportation costs, limited domestic competition, and under-investment in key sectors like education and health are significant hurdles.

Barker concluded by emphasizing the importance of stability and predictability for investors. While a weaker Kina presents both opportunities and challenges, a more competitive and consistent investment environment could stimulate economic growth and job creation, addressing the issues of low growth and limited formal sector job opportunities experienced over the past decade.

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Air Niugini Resumes Fokker Jet Operations to Rabaul