Monetary policy in Papua New Guinea: a critical analysis

In 1990, 1994 and again in 1998 Papua New Guinea has had a number of serious fiscal and monetary crises. In 1998 interest rates have exceeded 20 per cent and the exchange rate depreciated significantly. Despite high GDP growth during the 1990s, employment has not risen and investment in sustainable productive activities has been virtually non-existent, except for the oil and gas industries. Human development indicators have fallen, showing that the country has not been able to translate the windfall gains from mineral and petroleum wealth into solid, sustainable development. This paper takes a critical look at monetary policy in 1998 and makes some suggestions about the lessons that can be learnt to lessen the impact of future crises