BY ALYSSA LENG
AND JOLLANDA MATHEW
The monetary policy statement (MPS) published by the Bank of Papua New Guinea (BPNG) in March this year places an unprecedented focus on the exchange rate, including a dedicated special feature article on the topic.
While the exchange rate has been controlled by BPNG since 2014 when it moved from floating to rationing, the bank has never provided a formal justification of its approach.
Nevertheless, the bank’s recent MPS and the special feature article indicate that concerns about depleting foreign currency reserves and potential inflationary effects of depreciation are significant factors behind BPNG’s reluctance to release more forex to the market.
In this article, we explore some of the views put forward by the bank in the context of the IMF program PNG has recently agreed to.
Foundationally, BPNG suggests in the special…
