PORT MORESBY - The fact that the International Monetary Fund admitted its failure in its assistance to Greece showed it was willing to learn from its mistakes and avoid the pitfalls in similar cases.
The key is always that, whatever solution Papua New Guinea adopts to get our economy going again, would be a negotiated outcome with multilateral financial institutions like IMF.
This means we have as much say in the solutions as they do.
We have certain strengths we can lean on. First being land.
Communal ownership of and utilisation of land shields our people from the headwinds of the cash economy. This is a great strength.
Any austerity measure implemented would therefore be less catastrophic for a majority of our people than if the same were implemented in a totally cash dependent economy.
Given the importance of land for our sustenance, whatever economic solution that seeks to alienate land from us is a no-no and must be rejected outright.
Multilaterals like IMF should know this basic fact about PNG by now and must steer clear of land when considering measures to help stabilise our economy.
The second opportunity for government is to sell the state-owned enterprises (SOEs) to raise funds and bridge the funding gap.
While only a few SOEs would be saleable, given the poor state of each of them, the privatisation agenda should be pursued regardless.
Third, the government should change the mandate of Kumul Petroleum and simplify it so it exists to raise financing only to enable the government to fulfil its legislated back-in rights in petroleum projects.
Back-in rights allow the government to acquire an equity participation once the commercial discovery has been made without carrying the risk of exploration.
Furthermore, the government’s share of dividends that flow to Kumul Petroleum should be diverted straight into consolidated revenue to fund the government budget.
We also have a portion of the around K6.7 billion held in the PNG Sustainable Development Company that could be released under some arrangement to help restore the economy.
Perhaps the IMF and other multinational institutions could guarantee a loan from PNGSDP to the government in exchange for state-owned enterprises being privatised in an orderly manner over a period of time.
Papua New Guinea does have options and we need to go into negotiations knowing what those options are.
Let’s get on the front foot and suggest ways in which we can help ourselves and then invite others to help us help ourselves.
David Kitchnoge is head of research and advisory at Kina Funds Management