Anthony Smaré Sounds Alarm Over Gold Bill's Threat to Bank of PNG Independence
Anthony Smaré, President of the Papua New Guinea Chamber of Resources and Energy (PNG CORE), has issued a stern warning regarding the potential ramifications of the provisions outlined in the Gold Bill (National Gold Corporation Bill 2022), asserting that they pose a severe threat to the independence of the Bank of Papua New Guinea (BPNG) in issuing national currency.
Smaré's concerns center around the catastrophic impact such restrictions could have on the PNG economy, potentially leading to uncontrolled inflation and significant depreciation of the PNG kina.
He emphasized the pivotal role of the reforms implemented during the Morauta government's tenure in 2000, which established the BPNG as independent from governmental and foreign influences in its regulation of monetary policy and the banking sector. Under the Central Banking Act, the BPNG is exclusively authorized to issue currency notes and mint coins for PNG, thus controlling the flow of money and subsequently inflation.
Smaré highlighted provisions within the NGC Bill that effectively undermine the independence of the BPNG. Sections 329, 330, and 331 of the NGC Bill stipulate that the National Mint company holds exclusive rights to currency production, with the BPNG prohibited from outsourcing this responsibility.
Furthermore, Section 332 of the NGC Bill transfers the role of producing and issuing gold coins from the BPNG to the privately-owned National Mint, without any restrictions on currency production.
Expressing deep concern, Smaré emphasized the potential dangers of placing currency control in the hands of a profit-driven entity, rather than the BPNG's traditional objective of regulating monetary policy to supervise inflation.
Smaré warned that such a shift could pave the way for hyperinflation, exacerbating the economic challenges already faced by Papua New Guinea, including falling foreign exchange rates and high inflation rates.
He concluded by stressing the importance of safeguarding the sovereign role of the Central Bank in all aspects of currency production, urging policymakers to protect the independence of the BPNG.
As discussions surrounding the Gold Bill continue, stakeholders are urged to carefully consider the implications of these provisions on the stability and integrity of Papua New Guinea's financial system.
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