O’Neill poised for ousting as Duma’s URP defects to opposition
The O’Neill legacy: speaks of the nation, but all about himself

Analysis of economic statistics reveals a shocking truth

Paul Flanagan
Paul Flanagan - "My analysis of PNG’s statistics over recent years led me to conclude they are increasingly used to tell a convenient story for the government"

PAUL FLANAGAN | PNG Economics | Edited extracts

CANBERRA - Papua New Guinea’s economic statistics are corrupted – some credible figures slip through but others are manipulated to protect the government.

And, despite attempts to justify significant variations, explanations are riddled with major errors and omissions.

Statistics are usually boring. Lots and lots of numbers and details. The recent release by Papua New Guinea’s National Statistics Office (NSO) of the national accounts from 2006 to 2016 could easily be seen as a boring document.

At one level they represent some credible pushback against the corruption of PNG’s statistics, but the details reveal the possibility of ongoing political interference.

The new statistics also have a very worrying bottom line – living standards in PNG have gone backwards by over 10% over the last five years – over K500 for every single person in PNG on average.

The statistics confirm a GDP recession in PNG in 2008 (there was probably another in 2018) – so PNG cannot claim to have continuous growth over the last 16 years as senior politicians continue to claim.

PNG’s living standards have gone backwards or stayed constant in four of the five last years.

A key political implication of the most recent NSO release is that the secretary of the Treasury, Dairi Vele, has been lying about why PNG’s national accounts have been suppressed since a very inconvenient preliminary release by the NSO nearly a year earlier.

Vele’s explanations in official budget documents and Treasury briefings have focused on issues around the price index. But there is absolutely no support for Vele’s explanations in the NSO release.

Vele’s lies are difficult to interpret other than in the context of his close support for prime minister Peter O’Neill (who some say was instrumental in Dairi being placed in the top Treasury job after the ousting of well-respected former secretary Simon Tosali and over the top of strong internal candidates).

He has also closely supported the economic narrative of the O’Neill-Abel government. The politicisation of the key economic positions in PNG (including the reserve bank governor) has added to economic mismanagement in PNG.

The new set of statistics are an extremely convenient political compromise between the initial NSO estimates for the size of the PNG economy (supported by the IMF and World Bank) and the figures used by the PNG Treasury in the 2018 and 2019 budgets.

The compromise figure has come out at K60.1 billion, slightly closer to the government’s figure than the initial NSO estimate.

A key political problem with the NSO estimate was that it would have formed a base pushing the debt to GDP ratio above the legal limit of 35%. The new NSO numbers conveniently keep GDP below this number at 34% in 2016.

My analysis of PNG’s statistics over recent years led me to the conclusion that they were being increasingly used to tell a convenient story for the government rather than the best measurement actually available.

With a misleading explanation about the initial 2015 GDP numbers, continuing delays and indications that the Australian Bureau of Statistics had walked away from providing assistance, the call was made that PNG’s economic statistics were corrupted.

My own detailed analysis can only conclude that there are still so many errors and inconsistencies that the latest release cannot be trusted. Going through the errors, some are clearly just careless mistakes. But others suggest an on-going systematic attempt to inflate the GDP figures to meet the political agenda of having higher GDP growth estimates and keeping the debt to GDP ratio below 35%.

The figures, and how they’ve been used, reveal some inconvenient truths to emerge on the true state of the wider PNG economy, especially the economy outside the resource sector.

The key parts of the economy vital for supporting the people of PNG have gone backwards over 2015 and 2016. Indeed, after allowing for population increase, average incomes in PNG fell by nearly 10% over these two years. This is a shocking truth.

Of continuing concern is the fall in living standards. The key conclusion behind all the statistics from the recent NSO figures is that PNG needs to start on a new path if it really wants inclusive development.

Read the full story of the manipulation of PNG’s economic statistics and other up to date and vital analysis of the PNG economy on Paul Flanagan’s PNG Economics website here

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