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PNG economy ‘fragile’, but don’t mention the C word

Fairfax Harbour and Port Moresby CBD (left) and Hanuabada (right)
Fairfax Harbour showing Port Moresby CBD and Hanuabada village ( RGAPhoto86, Shutterstock)


NOOSA – Papua New Guinea’s economy is projected to grow by 4% in 2022, about the same as forecast for Australia, but the World Bank characterises the recovery as ‘fragile’.

As Covid slowed global production, the PNG economy contracted by 3.5% in 2000 but returned a small but positive outcome of 1% last year.

The more optimistic outlook for 2022 is based on renewed growth in the mining sector, especially the planned reopening of Porgera gold mine.

The World Bank has just released a report, subtitled Navigating a Fragile Recovery’, reviewing major developments in the PNG economy in a global context.

It currently supports 10 government projects valued at nearly two billion kina and covering agriculture, health, transport, water, youth employment and the delivery of services to rural areas.

The report says PNG still faces considerable challenges from Covid, despite not being as severely impacted as many other Asian and Pacific countries.

Its vaccination rate remains one of the lowest in the world, which means Covid outbreaks put great strain on the frail public health system and risk higher loss of life and a negative impact on the economy.

PNG health system constraints
Constraints on the PNG health system - corruption fails to score a mention
despite its notorious  and wide-ranging influence on the sector

“The biggest challenge for the PNG economy this year will be navigating a fragile recovery,” said the World Bank’s Port Moresby-based economist, Ruslan Piontkivsky. “This is particularly challenging while uncertainty remains high.”

Piontkivsky said it is vital that the government’s budget strategy emphasises increasing domestic revenue and improvements in service delivery, especially in health and education.

The World Bank stated that PNG’s agricultural production had not faltered during the pandemic, but economic growth lagged behind global and regional averages, a situation worsened by falling LNG and gold production.

PNG is not ensuring that companies in the minerals sector contribute fully to the budget through taxation and, in fact, resource revenue has remained flat for many years despite substantial investment in the sector.

The report states that, despite district and provincial improvement programs long being criticised, there is no oversight or accountability for how they are spent. Nor do the government’s procurement rules apply to these funds.

It is an open secret in PNG and beyond that these ‘improvement programs’ can be readily used as slush funds controlled entirely by sitting members, especially those favoured by the government of the day.

However it is not a subject that the World Bank, like many other organisations, chooses to broach.

So the report remains silent on the leakage of government money - and the resultant weakening of services - caused by corruption, cronyism and misappropriation.

The nearest it comes to expressing a view is to note that the PNG government should put more resources into ‘scrutinising’ [my emphasis] its investment and improvement programs.

The report also intriguingly reveals that 30% of these government projects are ‘dropped’ [World Bank emphasis] in the following year, but offers no explanation of so much money is spent on projects that are not completed.

“We will continue to work closely with the PNG government to help further develop physical capital …. to improve access to markets,” said Stefano Mocci, the World Bank’s manager in PNG.

But that work seems not to include addressing the triple curse of corruption, cronyism and misappropriation.

Link here to download the World Bank's full report


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William Dunlop

A few years ago, I suggested that Oil Search could achieve $10 a share under the right conditions.

I have been in and out of Oil Search since the early 1970s, for as low as 10c back then.

You can say what you like about Peter Botten but I can't speak too highly of him as I hung on to my Oil Search through thick and thin until now.

One of the Santos directors, the new owners, disposed of a small parcel of 400,000 returning him $2.8m.

I decided that what's good for the fatted goose is good for this gander and followed suit.

I have watched a multitude of aspiring PNG political crooks wax fat on what I can only describe as a few crumbs falling off the multinational corporate tables. Not a few pieces of gold or silver, indeed no, just a few crumbs.

Just how many billions have gone out of PNG for the modest corporate outlay of a few crumbs?

It's a bit like a hooker being told she is sitting on a fortune but the pimp finishes up with it at the end of the day. But it's still only crumbs.

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