By GEORGINA MICHAEL
The Member for Kundiawa-Gembogl, Hon Muguwa Dilu, has challenged the Government to provide evidence that IMF-backed economic reforms are benefiting Papua New Guinea.
Dilu said that the depreciation of the kina is driving up the cost of living and placing pressure on households and businesses.
During question time in Parliament today, Dilu questioned Treasurer Ian Ling-Stuckey over the decision to allow the kina to float more freely under reforms supported by the International Monetary Fund (IMF).
He argued that the weakening kina has led to “obvious signs of imported inflation”, making imported goods and services more expensive for Papua New Guineans.
Dilu said the kina had depreciated significantly against major trading currencies, particularly the Australian and US dollars, increasing costs for both consumers and businesses.
“As a result, imports are more expensive for families and businesses across PNG,” he told Parliament.
The kina float was introduced as part of broader IMF reforms aimed at easing foreign exchange shortages and allowing the exchange rate to find a market-clearing rate to encourage exports.
Dilu pressed the Treasurer for evidence-based answers, asking him to identify developing countries in Africa and Asia that had successfully implemented similar IMF reforms and experienced growth in exports, business activity and employment.
“Any policy must be evidence-based,” he said.
He also questioned whether PNG’s export volumes had increased as a direct result of the reforms.
“Can the Treasurer inform us how much the quantity of exports has actually gone up as a result of the IMF program, where the kina has been allowed to depreciate and find a market-clearing rate?” Dilu asked.
“The increase we see now may be from higher commodity prices, but has the quantity of exports actually gone up?”
Dilu further sought clarification on the country’s balance of payments, particularly the capital account, and whether investors were moving funds offshore because of concerns over the reforms.
“Can you confirm that currency trading value and frequency have increased because investors lack confidence to reinvest locally? Are they shifting capital offshore, then buying back kina cheaply to profit from depreciation instead of building businesses here?” he asked.
In response, Treasurer Hon Ling-Stuckey acknowledged the concerns raised and said he would provide examples of countries that had successfully implemented similar IMF policies before the end of the current parliamentary session.
“I couldn’t provide examples of countries in Africa that have succeeded with the IMF policy right now. I will provide that before the end of this parliamentary session,” he said.
On exports, the Treasurer cited export earnings rather than export volumes, saying PNG recorded export earnings of K51 billion in 2022, which fell to K46 billion in 2023 before rising to K51.7 billion in 2024.
“We expect record levels for last year when those figures become available,” he said.
Ling-Stuckey also outlined improvements in the country’s balance of payments, which stood at K2.8 billion in 2022, fell to K190.9 million in 2023, and rose to K238 million in 2024.
He said the current account surplus followed a similar trend, reaching a record K18.4 billion in 2024.
“The good news is that foreign exchange reserves have grown, and at the end of 2024 we were in excess of K14.6 billion,” he said.
Responding to Dilu’s concerns about currency trading and investor confidence, the Treasurer requested that the questions be submitted in writing and undertook to provide a detailed response.
While Ling-Stuckey maintained that export earnings, foreign reserves and key economic indicators were improving, Dilu argued that much of the growth reflected strong global commodity prices rather than the success of IMF-backed reforms, while ordinary Papua New Guineans continued to face rising living costs and inflation.