![]() Former Chief Secretary to Papua New Guinea Government, Ambassador Isaac Lupari CBE, called on the Government to immediately re-think and repeal amendments made to the Central Bank Act. “It is a big Mistake - and dangerous”. The amendments, which passed in the last session of Parliament will significantly erode the independence of the Bank, hence leading to politicization and destabilization. “Rather than moving to a more “collegiate style of decision making”, as claimed by the Treasurer, the amendments erode the independence of the Bank, and in doing so put at risk the financial future and international reputation of our nation”, Mr. Lupari said. He added that the government has already eroded the power of the bank through amendments made in September 2020 to increase the threshold of government access to reserves, and to remove clear demarcations that maintain independence.
“Taken together, these amendments strike at the heart of good governance and financial management. The Government has removed key mechanisms that protect the integrity of our monetary system and independence of the Bank”, the former Chief Secretary said. Describing the measures as a “regressive step”, Mr. Lupari said that rather than reflecting the actions of an emerging international economy, the amendments erode confidence, impact on macroeconomic policy and will have far reaching consequences for the nation’s credit rating and the stability of the kina. “We’ve seen what happens in other countries where the independence of the central bank is taken away, with countries printing money as if the central bank was a money printing factory”, he said. Mr Lupari drew on examples from Africa, noting Zimbabwe, where the value of the local currency became worthless. “Is that what we want for our country? To place our people on a pathway to starvation and destitution? To scare off foreign investors?”. I speak from experience, as a former Secretary for Treasury and an advocate of the fiscal reforms introduced by the late Sir Mekere, some 20 years ago. “Sir Mekere was a visionary. He understood the nature of the international financial system and the need for strong regulation to enhance stability. Together with the vision of our founding fathers, the late Sir Michael Somare and Sir Julius Chan, the Bank of PNG was built to become an independent institution - and that is how it should remain”. Furthermore, with the amendments, the demarcation between the Bank and the Department of Treasury has been eroded, as has the process for appointing an independent Governor of the Bank. “What we are seeing now is what happened with our State-Owned Enterprises with boards becoming politicized and independence being removed”. Mr Lupari said that he is supporting calls from Oro Governor, the Hon. Gary Juffa and East Sepik Governor, the Hon. Allan Bird to immediately repeal the amendments. “Now is not the time for knee jerk reactions, or desperate attempts for quick wins to generate cash. Our economy needs stewardship, our government needs to exercise fiscal discipline and the Central Bank should continue to have the independence that was originally intended. ‘We need to reign in debt, invest in income generating infrastructure and do away with fanciful projects such as the gold refinery project that does nothing to enhance the reputation of our nation”, Mr. Lupari said. _AMB. Isaac B. Lupari, CBE Next : PMV Fares Increase Nationwide Comments are closed.
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