10 Jul 2008

PNG worried about inflation as economy keeps booming

12:00 pm on 10 July 2008

Papua New Guinea's treasurer, Patrick Pruaitch, has warned that the country's booming economy is under threat from very worrying inflation rates.

Mr Pruaitch has told parliament that external factors like higher global food and fuel prices have also added to inflationary pressures.

He says annual inflation in 2008 is expected to rise substantially to an estimated 8.1 per cent while economic growth this year is projected to rise to 7.6 per cent.

Mr Pruaitch says high domestic demand for food and fuel stemming from the commodity price boom, improved business confidence and relatively loose monetary policy as well as global increases in the price of most commodities is adding pressure.

He says PNG has reduced 2007's national debt of more than 3 billion US dollars to about 2.5 billion, which amounts to a halving of the country's debt in the past five years.