[Translated Tok Pisin: Mak bilong Kina em lewa bilong kantri]
Papua New Guineans have paid scant regard to their currency, and its value for far too long a time.
Many have left it as a subject in the sole domain of Central Bankers and economists. Others have left it to the bureaucrats in the Finance or Treasury Departments to manage. Our Politicians (except for Hon. Garry Juffa) seem to think the Bank of PNG knows what it is doing, and what happens to the currency has little or no impact on the wider economy of PNG and the welfare of the people.
There is a malaise of serious disconnect that exists between the Prime Minister’s Office, the highest office of the Executive Government, and what is happening that the Central Bank that is tasked with managing the currency of this country. However, the buck inevitably stops with the Prime Minister.
The proper management of the currency and maintaining its value has everything to do with good government. The issue of whether a government is governing the nation well or not has to do with the how it maintains both the macro and the micro aspects of our economy. At the heart of this function is the maintenance of our currency at a stable and yet relatively respectable value, taking into account all necessary variables, including monitoring imports and exports, expenditure, capital out flows, and other relevant activities.
Today, the villager who innocently goes about growing yam or taro or broccoli to sell in the market does not realize that his or her government’s management of the currency directly impacts on his or her ability to meet expenses for basic necessities, and live. The public servant on fixed wages or the security guard on minimum wages, feeding a large family, does not realize that how much his already meagre wages can buy depends on the government’s management of the economy. At the heart of the economy is the currency.
The businessman importing or exporting goods and commodities is all too aware of the impact of the currency, as it plays out in exchange rates, on his business. A higher Kina value relative to the Australian Dollar, the US Dollar and the Euro, helps those paying for imports in those currencies as they don’t need to fork out too much Kina, whereas a lower Kina value appears to assist our commodity exporters as their returns in US Dollars or Australian Dollars appear to multiply in Kina receipts.
The common village farmer and mother who grows broccoli goes to the market and sells her broccoli and in the afternoon, on her way home she realizes she needs to feed the family for the night, so she buys a packet of rice and a tin of fish, only to realize that the prices are way too much, and there is no change left over to take home to show for her months of labour in the broccoli garden. It all goes in one meal. The next time, she gets smart; she increases the price of a single sprig of broccoli to double what she sold for previously. The innocent security guard on fixed wages goes to the market because he cannot afford store goods to feed his family, only to find that the market goods are just as expensive as the imported store goods!
In the past the security guard’s wife used to sell buai and loose cigarettes outside their shared home to supplement their income, however, since the city bans on such hawkers, they just can’t make ends meet! The adults can go without meals and have one meal a day, but what about the babies and little children!
The currency is no longer a subject for bureaucrats and politicians to discuss and deal with behind closed doors. We can no longer ignore it or pretend it does not impact on the common citizen, or even the serious businessman.
For far too long, we have allowed banks and a few interested individuals to manipulate it and make mountains of money to the disadvantage of the common citizen. If anyone compares the level of disparity between the buying and the selling rate of the kina against any currency in the world, the disparity, and the margins that our commercial banks like BSP, Westpac and ANZ are making is nothing short of criminal!
Sometimes, I wonder why our Police would chase after common thieves on the streets who are stealing to buy food to survive in this city, while the commercial bankers who steal so much from the people under the guise of legitimacy get away scot free. All because of a Central Bank Governor and his text book economists, and their equally ignorant politicians, who have lost touch with the daily gruelling realities our people have to live under.
Crime in any community does not pay. However, here we have some people stealing small things to make ends meet and feed their families, while those who are stealing big time under the guise of legitimacy, like banks and bankers, are stealing for that next overseas holiday or the third property to add to their portfolio, or for their annual returns and the balance sheet to look great. A large proportion of commercial banks’ profit margins are directly contributed to by foreign currency trading on buy and sell rates, with margins that would not be allowed in any other country in the world.
The commercial banks and their annual profit margins in this country are equally criminal.
In no other country in the world would they be allowed to get away with what the commercial banks get away with in this country. They are feeding off the misery of the people, and the Central Bank does not have the capability to properly regulate their fees structures, currency margins, and profit margins, to properly serve this nation. In this regard, there is a serious need for an independent Banking Ombudsman, with powers to regulate some of the functions and ameliorate on behalf of bank customers and common people.
The Kina is admittedly a low band currency, and outside of this country and aside from our trading partners, only few people speculate or even trade in the Kina. We are an import oriented, and an import dependant country. Our exports are predominantly by big foreign owned companies. Very few exporters are PNG citizen owned. For example in the Agri-Forestry sector where our citizens participate in exports, our biggest exporters are mainly foreign owned, with a slice of 90% of the business. In the Fisheries sector almost 95% is foreign owned. In the Mining and Petroleum sector almost 95% is foreign owned and operated. Most of the money coming into this country is in turn used in extractive activity, to extract the resources out of this country to the ultimate benefit of people who don’t live in this country, or who will one day retire with their wealth elsewhere.
For far too long the government has paid scant regard to the currency, and its relative value. In the right political hands, it is a great tool to enrich this nation and prosper Papua New Guineans, but we have fools and the blind, trying to lead a nation of the compliant, the complacent, and those who simply are not in a position to know. Politicians spend as if there is no tomorrow, without any regard for the health of the foreign reserves, and its inverse effect on the currency.
How can the simple security guard on fixed wages trying to make ends meet, and the mother growing broccoli in the village struggling to survive is supposed to love admire and adore their political leaders, when they have in this regard clearly failed the people?
There are many ways to address a sliding currency. One of the ways to address this issue and stabilize the economy is to peg the currency. This is not a new discussion. We have had many talks about a regional currency that has come to naught. The issue of a sliding currency is an urgent one. We have had many in the past for pegging it, and some against it. Those against it always use the revenue in Kina from exports as a basis of dissuading bankers and successive Finance Ministers. However, that argument is a fallacy as most of Papua New Guinea’s export sector is foreign owned and foreign controlled. Those against it have their own agenda.
We are a high import dependant country. Until the day we change that imbalance, until the day we produce basic food items locally and cheaply, and increase the real value of our people’s wages and salaries, we have to address the slide in the currency by pegging it to help the people. A deliberate decision needs to be made now, to peg our currency to either the Australian dollar, our major trading partner’s currency or another stable currency, with manageable variables.
We have far too much currency colonialism taking place with far too much of our resources being ripped out by so called exporters, or by people on foreign currency salaries, without much recompense in real value back to our people who have to struggle to meet their daily needs, as well as affording imported medicines for the sick and the dying. What we are paid in Kina buys very little of the imported foods and goods while foreigners live well on the back of our resources.
Our Politicians must cease being silent audiences or ignorant participants in this systematic rip off.
Enough is enough Mr Prime Minister! You can live well and jet-set all over the world, but what about the rest of us? Peg our currency, and give us our true value now!
Dr. Kalluwan M Pohon