Devaluation should be first step for new PNG govt - economist

11:26 am on 16 August 2017

An Australian economist said the new government in Papua New Guinea should consider a substantial devaluation of the kina.

The Papua New Guinea economy is in trouble and the Treasurer, Charles Abel, said he'll devise a plan within a hundred days of the government taking office to try and cope.

The director of PNG Economics, Paul Flanagan, said the country needed to end its reliance on oil, gas and minerals and instead focus on developing sectors such as agriculture.

Economist Paul Flanagan

Economist Paul Flanagan Photo: ANU

He said to encourage this, one of the first steps should be a substantial currency devaluation to make Papua New Guinea commodities more competitive.

"It is always a world of hard choices given how far PNG down this slippery economic slope but there are mechanisms to pick things up again and one of the best and easiest of those is in fact improving the exchange rate, making it more competitive, allowing PNG to really enter into the Asia Pacific century. "

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