Weaker PNG kina hits manufacturers, aids exporters

PNG’s weaker kina has lost ground across major currencies, prompting businesses to assess the ripple effects on trade and costs.

Currency decline and its scope

The Bank of Papua New Guinea’s Trade Weighted Index shows a 6.5% drop in the kina’s value year-to-date through August, with the slide continuing afterward.

Against the US dollar the kina is down 7.5% over the past twelve months; the Australian dollar, Japanese yen, Singapore dollar and Malaysian ringgit have each recorded losses of 12.6%, 5%, 9% and 10% respectively.

Impact on exporters and manufacturers

Agricultural exporters say a cheaper kina could improve the competitiveness of palm oil, cocoa and coffee in overseas markets, assuming sufficient harvests are available.

Mineral and petroleum shipments, priced in US dollars, also stand to benefit from the exchange-rate shift.

Conversely, manufacturers report higher expenses for imported inputs, which they say is pushing up domestic prices.

Employers seeking expatriate staff note that a declining kina makes local salary packages less attractive, potentially tightening the labour pool.

Fuel support and fiscal cost

A fuel-support package launched in April aimed to soften the impact of rising global fuel prices, helping the economy maintain momentum.

The programme’s direct subsidy has cost the government just over K1.2 billion, roughly four percent of the 2026 budget.

The cash subsidy ended on 8 November, while a GST exemption on fuel is set to expire on 31 December.

The upcoming 2027 budget, to be presented by Treasurer Ian Ling-Stuckey, will reveal whether policymakers will extend the GST relief.

Third edition of Mining & Energy magazine launched

The third edition of Mining & Energy, an annual publication on PNG’s resources sector, was launched in Port Moresby last month. The issue expands coverage to all productive resources projects across the country.

It also examines current exploration activity and its financing, and highlights the services sector that supports the industry.

Power sector challenges

Since 2007, the state utility PNG Power has seen a succession of CEOs, most recently New Zealand-born Paul Bayly, who resigned after eighteen months.

Historical accounts describe early difficulties under former leader Patrick Mara, including strikes and an aging network.

Recent progress includes the rise of independent power producers and the lifting of a twelve-year electricity-price freeze in June.

Nevertheless, the utility continues to grapple with profitability, reliability and frequent load-shedding, challenges amplified by higher fuel costs and reduced rainfall linked to El Niño.

Plans for partial privatisation remain on the agenda; a new minister was appointed in July and a refreshed board took shape in September.