BRISBANE, 12 AUGUST 2026 (THE NATIONAL)–Papua New Guinea Central Bank is planning financial sector reforms to maintain economic stability, expand financial inclusion, restore Kina convertibility and strengthen the country’s financial system, says bank governor Elizabeth Genia. Genia told the PNG investment conference in Brisbane that price and financial stability remained the foundation on which economic growth, financial inclusion and reform must be built. She said that social and economic objectives could not be achieved without stability. “Without stability, we cannot fulfil any wider social or economic objective,” she said. “That is true for individuals and it is equally true for families, communities, businesses and the nation as a whole.” Section 7 of the Central Banking Act outlines price stability as the bank’s primary objective. This is followed by secondary objectives including financial stability, sustainable medium-term economic growth and the development of PNG’s financial system. Genia said Papua New Guinea, as a small and relatively open economy, remained exposed to movements in food, fuel, freight and commodity prices as well as weather conditions. Headline inflation was forecast at around 4 percent in 2026, while underlying measures were forecast at or just below that level in 2027 and 2028. “The convergence of the three measures gives us greater confidence in the inflation outlook over the medium term,” Genia said. “But we never can be complacent.” Genia said the El Niño weather pattern was re-emerging and was already affecting mining operations and domestic food production. “These are areas we monitor closely,” she said. She also noted that headline inflation fell sharply during 2024 and briefly moved into negative territory, coinciding with a substantial fall in non-tradable inflation. Genia said the exchange rate, rather than the Kina Facility Rate, had in recent years acted as the nominal anchor for inflation, with the gradual depreciation of the kina playing a stronger role in anchoring prices. The longer-term objective was for the KFR to become a more effective monetary policy instrument. “In recent years, the exchange rate rather than the Kina Facility Rate has been our nominal anchor for inflation,” she said. “Our longer-term objective is for the KFR to become a more effective monetary policy instrument,” she said….PACNEWS