Foreign exchange restrictions are a major business issue and the current approaches of high budget deficits squeezing out the private sector, rationing foreign exchange, dramatically cutting imports, stopping trade financing, and stopping repatriation of capital all act to undermine confidence and prospects for new foreign investment.

Having PNG’s central bank even deny there is a foreign exchange shortage, or claim it is all the private banks fault, also undermines growth potential which is vital for fixing the budget.

Second, will the prime minister clarify whether he has agreed to the 2017 cuts in the local direct funding programs channelled to provinces and districts (DSIP and PSIP)?

Clear agreement between himself and his new treasurer is vital for giving credibility to the recent 2017 supplementary budget.  Without such an agreement, over 70% of the planned budget savings will not eventuate and another large budget deficit blowout will be inevitable.

Third, what is the government’s approach to encouraging a mixed economy where a diversified private sector can play a key role?

Recent consultations are welcome and the review of draft policies in areas such as small to medium sized enterprises and land are welcome inclusions in the 100-day plan.

However, government actions seem to give the primary role for new developments directly to government or a lucky few firms through protectionist arrangements.

PNG’s private sector credit growth is falling in real terms and as a share of the economy.

One question which is important for PNG, but was unlikely to be covered in the speech, is just how bad will things have to become before the prime minister is willing to really reach out to the international community for assistance.

A credible 2018 budget, set in a medium-term recovery plan that includes a confidence-building environment for the private sector, will be vital for PNG’s economic future.

Paul Flanagan is the director of Indo-Pacific Public Policy and Economics Pty Ltd