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The CIA view: richly endowed; big challenges

The CIA WORLD FACTBOOK is a source of hard-nosed information on the state of the globe. So how does PNG look  to the US intelligence community….

PAPUA NEW GUINEA is richly endowed with natural resources, but exploitation has been hampered by rugged terrain and the high cost of developing infrastructure.

Agriculture provides a subsistence livelihood for 75% of the population. Mineral deposits, including copper, gold, and oil, account for nearly two-thirds of export earnings.

The government of Prime Minister Somare has expended much of its energy remaining in power. He was the first prime minister ever to serve a full five-year term.

The government has brought stability to the national budget, largely through expenditure control; however, it relaxed spending constraints in 2006 and 2007 as elections approached.

Numerous challenges still face the government including regaining investor confidence, restoring integrity to state institutions, promoting economic efficiency by privatizing moribund state institutions, and balancing relations with Australia, its former colonial ruler.

Other socio-cultural challenges could upend the economy including an HIV/AIDS epidemic, with the highest infection rate in all of East Asia and the Pacific, and chronic law and order and land tenure issues.

The global financial crisis had little impact because of continued high demand for Papua New Guinea's commodities exports.

A consortium led by a major American oil company plans to begin the commercialisation of the country's estimated 227 billion cubic meters of natural gas reserves through the construction of a liquefied natural gas (LNG) production facility that could begin exporting in 2013 or 2014.

This, the largest investment project in the country's history, received a green light in December 2009 and has the potential to double GDP in the near-term and triple PNG’s export revenue.

The government faces the challenge of ensuring transparency and accountability for revenues flowing from this and other large LNG projects.


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