Foreign currency is a key cause of the big plunge in PNG imports, say economists at a recent forum in Canberra.
They warned that lack of access to foreign exchange had become the “No 1 issue for business” and if prolonged, could cause PNG to face another “lost decade” of economic growth, similar to what happened in the 1990s.
The four economists presenting at the Development Policy Centre at the Australian National University forum include Prof Stephen Howes, Director Development Policy Centre, Australian National University; Nelson Nama, School of Business and Public Policy, UPNG Rohan Fox, Research Officer, Development Policy Centre, ANU and Marcel Schroder.
They claimed the economy was continuing to grow and provided evidence they believed was proof of an economic recession in 2015 and 2016.
In a joint presentation, they said output and sales by the business sector has fallen by 20.35 percent from its peak with negative economy-wide growth contributing to a 25 percent fall in tax revenue, inclusive of GST, income tax and non-resource corporate tax.
Nelson Nama told the forum that formal sector employment declined in 2015 and 2016.
He said last year, personal income tax collection fell by K192.8 million, company tax collections were down K281 million and GST collection dropped by K124.4 million.
Nama said there is “firm evidence that whole sectors of the PNG economy have been in a recession and no doubt GDP has declined between 2015 and 2016”.
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