This depreciation stabilised in 2016 and the issuance of three-year bonds to counter this is being considered, Choi said.
“The currency has depreciated by 16 per cent in nominal terms since mid-2014 but since May 2016 the currency has been stable against the US dollar.” he said.
“Central Bank’s intervention has also been limited and gross foreign reserves were US$1.7 billion (K5.7 billion) as of mid-October 2017.
“International multilateral agencies have indicated commitment to provide concessional financing, and the authorities intend to issue a three-year bond to finance structural reforms with some financing used to mitigate the foreign exchange imbalances.”
An International Monetary Fund staff report recommended a gradual adjustment to the exchange rate by the Bank of PNG.
“A move towards greater exchange rate flexibility and elimination of overvaluation of the kina should go hand-in-hand with the adoption of a credible fiscal consolidation plan and medium-term fiscal strategy.” The National/ONE PNG