An economist claimed that earning more foreign cash through exports than imports is a simple strategy to ensure adequate foreign exchange.
This was said by Corinna Economic Advisory economist Saul Eslake recently.
Agriculture, he noted, was PNG's export strength.
“PNG authorities need to manage the economy carefully that is through a monitoring policy on the part of BPNG (Bank of Papua New Guinea) and fiscal policy on the part of the Government,” Eslake said.
He said the country should concentrate on its assets in agriculture and the extractive industry, while also investing in human resources to enhance those sectors and focus on surrounding markets.
Eslake believed that a mix of long-term strategies that promote the export industry, as well as cautious macroeconomic management, is required to ensure that domestic and import demand are proportional to export income, allowing the country to build up its foreign exchange reserves.
He stated that the economy should be carefully developed and that the exchange rate should not be managed rigidly.
“Countries that seek to run a fixed exchange rate often find themselves in trouble and having to ration excess foreign exchange where they allow the exchange rate to be misaligned with the country’s underlying fundamentals,” Eslake said.
Reference: The National (8 September 2021). “‘Earn more forex through exports’”
