PNGBLOGS

by NIUGINI OUTLOOK THE MOST SOPHISTICATED LEADERS INTENT ON GRABBING ABSOLUTE POWER IN A COUNTRY AREN'T SO STUPID AS TO TRY IT IN ONE STEP OR A SUDDEN COUPE.   That strategy is very risky and it only gives one chance to get things right More likely to succeed is a slow step by step process on multiple fronts that slowly closes off normal democratic checks and balances. Thats the whole framework of what makes a de mocracy work - the legal mechanisms that keep a leader from grabbing too much power while promoting the spread of power across different sections of government and across many individuals.   Peter O'Neill is a brilliant tactician who has virtually completed pulling the wool over the eyes of most people of PNG. The only challenge remaining is to secure the 2017 election in PNC's overwhelming favour, whether honestly or dishonestly, so that he can proclaim that he has a mandate from the people to rule with absolute power. Following that, he can

NATIONAL BUDGET SPOOKS PRIVATE BUSINESS AND INVESTMENT IN PNG   by WILSON TALAG Economist Paul Flanagan's recent remarks that appeared in PNG Blogs and elsewhere highlight 8 key areas of what looks to be looming financial disaster.  Mr Flanagan's enlightening report is the basis for this discussion and why the performance of each one of the key areas has started to  spook business and investors.  The seriousness of PNG’s current financial situation is becoming very clear.   A little over a week ago the government came very close to failing to come up with the year end public servant pay.  This near disaster occurred despite supplementary budgets designed to avoid such unexpected money shortages.   Another red flag flying high and warning that behind the scenes, PNG's finances are rapidly deteriorating under the O'Neill government. The 8 key areas of concern are (1) Government lies over the actual size and growth of the PNG economy, (2) Discrepancies  ove

by WILSON TALAG “For a small country whose economy is heavily dependent on volatile commodity prices to  borrow heavily hoping that commodity prices will remain high is the pinnacle of stupidity.” Smart investors are not anywhere as dumb as the average Papua New Guinean citizen whenever  Prime Minister Peter O’Neill speaks.   O’Neill can utter complete lies about the PNG economy and government budget to the public and people will take his words at face value.  Foreign investors and the foreign owned private sector in PNG make good money because they are not so gullible.  They check things out and what they have learnt is disturbing.  The Prime Minister himself does not understand this reality and continues to present only information he wants the investors to hear.  But the investors are wise to his tricks and overall investor confidence in PNG has plummeted close to nil if the side comments of investors are to be taken at face value.    Papua New Guinea’s Prime Minist

by PAUL FLANAGAN PNG’s government must be embarrassed by the International Monetary Fund’s (IMF) assessment of its economic performance. In an extraordinary step, and the first time in PNG’s 41 year history of Independence, the PNG government has refused to release the IMF’s 2016 summary of the PNG economy. 98% of countries agreed to release this information in 2015 – so the PNG government has moved to the bottom 2% of governments when it comes to economic transparency. In the IMF’s final press release (see here) before Christmas (generally seen as a good time to bury bad news), the International Monetary Fund indicated that “The [PNG] authorities need more time to consider the publication of the staff report and the related press release.” This appears to be polite IMF diplomatic speak for the PNG government not wanting to release the information. The IMF mission visited in mid-2016. An early draft asking for PNG government comments would have been provided about two months ago

by PAUL FLANAGAN In an article for the ANU’s Development Policy Centre eighteen months ago (see here) , I congratulated PNG’s central bank (BPNG) for its very constructive stance in stopping its effective printing of money to fund the government’s budget deficit. I noted how this reflected positively on the independence of BPNG, an independence built into its charter by Sir Mekere Morauta (PNG’s former Prime Minister) and Sir Wilson Kamit (PNG’s central bank governor from 1999 to 2009) in response to PNG’s last major economic crisis in the late 1990s. Unfortunately, this independent role appears to have been reversed from the start of this year. Based on the latest Quarterly Economic Bulletin released on 18 November 2016 and its accompanying tables (esp Table 2-3 for BPNG’s assets sheet see here ) PNG appears to have returned to a very slippery slope of effectively printing money by back-stopping auctions in government securities – a practice initially warned about in September 2