PNGBLOGS

by PAUL FLANAGAN The Final Budget Outcome provides surprisingly frank numbers on the O’Neill government’s inexcusably poor management of government revenues, expenditures and debt. This document confirms a budget deficit and debt blow-out during 2016. PNG has never before -even during much worse falls in commodity prices – had such an appalling string of huge budget deficits. The government has no credible path out of the budget mess. Deficit levels are getting larger, not smaller. PNG Treasury states the debt to GDP ratio is 32.6% and so exceeds the 30% limit set out in the Fiscal Responsibility Act (and using the GDP series when this benchmark was created, it is now 42.7% of GDP). As a result of the failure to manage this fiscal crisis, PNG’s debt in 2016 is 258% of its 2012 levels. This will be a painful legacy for  PNG’s future as little of the debt blow-out has been properly invested. The 2016 Supplementary Budget assumed that revenues would increase by K928 million

by PATRICK PRUATCH Greetings and welcome….Sir Michael, Party President and executives, NA candidates, members and supporters.. Introduction: After serving as the Ruling Party for two consecutive terms in 2002 and 2007, the National Alliance Party was ousted in a parliamentary coup in 2011. Subsequently, a Government led by the Peoples’ National Congress took office in 2012. Looking back it is clear that management of the PNG economy was at its best during NA’s two terms in office from 2002 to 2011. I intend today to help all NA members and candidates to cast away any doubts that this may not be the case. This is an important part of our claim that NA deserves to form the next Government. NA and its candidates need to campaign in a confident and purposeful manner to ensure the return of an NA-led Government. I am confident that as head of the next Government, and with the right team behind me, National Alliance will once again be able to restore sound economic policies and ris

by TERRY SEMBO STEP BACK MENTALLY AND CONSIDER FOR A MOMENT WHAT OUR GOVERNMENT IS DOING IN THE NAME OF FOREIGN INVESTMENT: They have opened the door to every Tom, Dick and Harry foreign invader to come into the country. Too many are worthless carpetbaggers smelling the prospects of big profits for their pockets and not giving a damn about PNG or its peoples. The reason why we attract so many unscrupulous investors is because our country is, overall, a poor investment prospect in terms of high risk. Yes, high profits, but only if you get around all the risks. The government acts like the Supreme Pamuk in dealing with foreign investment and foreign investments. There is a story from the early 2000s when InterOil came sniffing around PNG and had a meeting with Mining and Petroleum Engineer department top cats. The InterOil representatives apparently were neither polite nor tolerant of melanesian niceties. They got straight to the point and said, you either do things the InterOil wa

by SAM KOIM At the 25th Papua New Guinea–Australia Ministerial Forum held recently in Madang, the Government of Papua New Guinea (GoPNG) surprised the Australian Government Ministers in attendance by requesting the Australian Government to take a paradigm shift from its program and project based aid to direct budgetary support as was during early days of PNG’s statehood. Two reasons publicly given by the GoPNG for the request are that firstly, it is claimed that the Australian aid programs are running parallel to the GoPNG development agendas and secondly, it is perceived that a lot of middlemen are chewing up most of the funds that could otherwise be spent on tangible projects. It is understood such requests were made previously and Australia rejected it, but this time, the Australian Government had undertaken to consider it in an upcoming review on aid to PNG. Although the GoPNG denies the request is driven by the cash flow crises the country is facing, it is an open secret

by PAUL FLANAGAN PNG and Mongolia have much in common economically. Indeed, the latest World Bank Global Economic Prospects report portrays them as near economic twins despite their  historic, cultural and geo-political differences.   If anything, Mongolia was considered the healthier of the two countries. There is now one important economic difference – Mongolia last week  recognised  that it needed help from the international community. By doing so, it mobilised $US440 million in IMF funding and an estimated additional $US5.5 billion in additional cheap loan and grant assistance (much cheaper than Credit Suisse). In contrast, the O’Neill government has failed to concede its economic mismanagement requires a similar solution – low cost financing conditional on improved economic policies.  Foreign currency restrictions are the new norm for business, but this is hurting growth and discouraging further foreign investment. There is much good that a similar assistance package co

by APELIS TOKIVA PETER O'NEILL HAS DEDICATED THE LAST 4 1/2 YEARS TO PARALYSING ANY DEMOCRATIC INSTITUTION OF GOVERNMENT DESIGNED TO KEEP CHECKS ON ANY LEADER AMASSING TOO MUCH POWER, THEN ABUSING IT:  He has successfully paralysed the ability of the police, fraud squad, ombudsman commission, auditor general, etc to investigate white collar crime or leader abuse of power by strangling them financially and if necessary, shutting them down physically.  He has successfully strangled the court system using his old strategy which has worked so well for his NPF fraud troubles and others in the past. Mounting endless court challenges passes time to the point the public forgets all about the case. That's when Peter O'Neill (and Jimmy Maladina) can make a deal, through bribery or intimidation (whatever it takes) to end the court case in his favour.  He has successfully castrated Parliament until it has become an easy to manipulate puppet, usually successfully warding of

by PAUL FLANAGAN This is the third and final posting on PNG’s 2016 IMF Article IV report.  The two previous posts have focused on PNG’s growth rate being much lower than claimed by the O’Neill government and PNG’s weak external position. The focus of this blog is on fiscal and monetary policy. The IMF report estimates the 2016 budget deficit will be K628 million greater than estimated by the government (so reaching 4.4% of GDP), and this feeds into greater debt levels. Government debt at the end of 2016 is estimated to be K967.3 million greater than stated by the government (and this does not include build-ups in off-budget debt such as the K3 billion in borrowings for Oil Search shares). While commending the government for its actions in the 2016 Supplementary Budget and “prudent” 2017 budget, there are concerns about where expenditure cuts have been made, the lack of effort on raising revenues (in particular from the resource sector), and the need to improv

by STEVEN ROLLAND As the country is fast sinking into debt and economic ruin, we are seeking answers. We know Prime Minister Peter O'Neill is a failed businessman, having failed in three (3) businesses he started before joining politics. His true success in business came when he put his hands into the public coffers. The rest is history. We cannot expect miracles from him. He is like an inexperienced mechanic who enjoys stripping all the parts of a vehicle in the pretext of fixing it but really does not know how to fix it. It will be moments when he will disappear without fixing the mess he created. Behind O'Neill's shonky economic management were a number of spivvy characters. One that PM O'Neill relied most was Dr Jacob Weiss, who provided most of the advise on structuring and procuring more loans. Jacob Weiss would attend Government Caucus meetings and mislead all the clown/naïve Members of Parliament that it was okay to borrow excessive from overseas and domes

UNDECLARED DIVIDENDS OF K20 MILLION PAID TO KUMUL CONSOLIDATED HOLDINGS LTD AND SALE OF TELIKOM ASSETS; LANDS AND BUILDINGS The current interim Chairman of TPNG Mr Mahesh Patel’s National News Paper publication dated 6th February 2017 page 25, saying that Telikom PNG paid a K20m dividend to Kumul Consolidated Holdings Ltd is yet another lie from Mahesh Patel to justify his existence in Telikom PNG. According to Telikom PNG Monthly Management Accounts as at June 2016, Telikom PNG actually made a loss of K3.7m earnings before tax. Therefore, this K20m is an undeclared dividend payment. This ‘money was drawn from either; the cash savings from Telikom staff prematurely retrenched through the illegal Spill and Fill exercise carried out in 2015 or from unused capital works/project funds. The withdrawal of funds was most probably charged to the Government Capital Grants Accounts or the Owner’s Equity Account. If it was a dividend declared profit, then Chairman should have properly de

by PAUL FLANAGAN Summary The recent IMF report indicates PNG’s international economic situation is much more frail than the picture presented by the O’Neill government. Indeed, the IMF calls the foreign reserves position ‘weak’. PNG has less than one third the recommended level in its international bank account. And this is despite the foreign exchange rationing that is hurting PNG business, investment and jobs. PNG’s published import coverage ratios are misleading and out of step with internationally accepted definitions. Specifically, PNG claims foreign reserves cover 13.0 months of imports while the independent umpire, the IMF, says the figure is only 3.2 months of imports. The suggested level for a country such as PNG is around 10 months of imports. PNG has less than one-third the prudent level. PNG says the import coverage ratio for non-mineral sector imports has increased by 28% over the last five years.  This appears to show a healthy improvement in PNG’s external