The impact was made all the worse by the fact that PNG is one of the most natural-resource dependent countries in the world.

With 80% of citizens still in the subsistence agriculture industry, investment in human capital has been sorely lacking in PNG, with successive governments focusing most attention on the extractive industries.

PNG was originally predicted to be the fastest growing economy in the world for last year, with a GDP growth rate of 15% projected in early 2015. This optimism was short-lived.

The O’Neill administration had been running steep budget deficits for some time, resulting in a sharp downturn in growth projections. This saw the adoption of drastic austerity measures, including savage cuts of 30% to administration, infrastructure, education, and transport.

PNG must urgently pay back its debts; any further drops in credit rating could well cripple the country into the next decade.

PNG currently faces a dire shortage of foreign exchange, highlighting the fact that international money markets are increasingly regarding the country as a risk.

Whilst the O’Neill government is maintaining a cool façade, this cash flow crisis is prompting many to speculate that PNG is on its way to bankruptcy.

Meanwhile, no attempts seem to be underway to undo PNG’s pronounced dependency on mining, with the Chinese-backed, $1.6 billion Ramu Nickel mine re-opening recently under controversial circumstances.

The immediate way forward for PNG probably lies in more spending financed by extensive new loans, although it is difficult to see where these lenders will emerge from.

The Melanesian states struggle in general with attracting private investment and creating investor confidence.

Aid dependency, resource dependency, and natural disasters remain huge challenges for the region. All four of the countries are continue to receiving significant aid from Australia.

Whilst Australia is by far the lead donor in each country, they are also receiving increased attention from China, whose Pacific Islands pivot is causing concern in Washington and Canberra.

 China’s aid and investment focus on the Pacific looks set to change the future of infrastructure and development in the region in a major way.

However, all the development assistance in the world will not cure Melanesia of its resource “curse,” and crafting a sustainable growth model for the 21st century looks set to be the key conundrum facing Vanuatu, the Solomon Islands, Fiji, and Papua New Guinea.

The question as to what is keeping Melanesia afloat is only going to become more important in the ensuing years. It is an issue that desperately needs to be addressed before pundits too hastily seek to condemn increased Chinese or Japanese investment in Melanesia, particularly in light of continued cuts to the Australian aid budget.

As the effects of climate change become more severe, and controversy grows over the slash-and-burn tactics of the extractive industries, the Melanesian states had best start searching in earnest for alternative solutions.

Sally Andrews is a New Colombo Plan Scholar and the 2015-2016 New Colombo Plan Indonesia Fellow. She is a Director of the West Papuan Development Company and the 2016 Indo-Pacific Fellow for Young Australians in International Affairs.