PNGBLOGS

DOMINIC MELLOR The $3.5 billion national budget for 2011 is the largest ever for PNG, with record levels of development funding allocated to education, health and infrastructure. The government expects to generate sufficient revenues to ensure a balanced budget. If well implemented, a robust budget that prioritizes social development is positive for PNG. There are, however risks in the economic assumptions underlying the budget framework. In particular, large discrepancies in revenue forecasts contained in the Medium-Term Development Plan (MTDP) 2011-2015 and the national budget may create funding expectations that will test fiscal discipline.Also, the government’s historic tendency to vastly under-forecast mineral revenues is potentially diverting resources away from under-funded social sector recurrent expenditure towards discretionary capital spending in supplementary budgets. Medium term settings The construction phase of the PNG liquefied natural gas (LNG)

DOMINIC MELLOR The $3.5 billion national budget for 2011 is the largest ever for PNG, with record levels of development funding allocated to education, health and infrastructure. The government expects to generate sufficient revenues to ensure a balanced budget. If well implemented, a robust budget that prioritizes social development is positive for PNG. There are, however risks in the economic assumptions underlying the budget framework. In particular, large discrepancies in revenue forecasts contained in the Medium-Term Development Plan (MTDP) 2011-2015 and the national budget may create funding expectations that will test fiscal discipline.Also, the government’s historic tendency to vastly under-forecast mineral revenues is potentially diverting resources away from under-funded social sector recurrent expenditure towards discretionary capital spending in supplementary budgets. Medium term settings The construction phase of the PNG liquefied natural

AARON BATTEN Optimism continues to run high about PNG’s development prospects. The last eight years have seen sustained growth across the PNG economy – the first time since independence. It is also the first time that real per capita incomes have begun to increase after a 30 year period of stagnation. Formal sector employment across all industries is now at record levels. Much of this success is attributed to high international commodity prices which have fuelled rapid output and revenue growth. But the growth also reflects increasing output from a variety of sectors and has taken place across a number of regions. Success has not been siloed. Sustained growth has also continued throughout the global financial crisis and despite natural declines in output from maturing mining activities. The biggest cause of optimism in the PNG economy is the upcoming LNG gas project which comes online in 2014. At its peak, the project is expected to increase real GDP by 25 per cent. In 2010 revenues a

AARON BATTEN Optimism continues to run high about PNG’s development prospects. The last eight years have seen sustained growth across the PNG economy – the first time since independence. It is also the first time that real per capita incomes have begun to increase after a 30 year period of stagnation. Formal sector employment across all industries is now at record levels. Much of this success is attributed to high international commodity prices which have fuelled rapid output and revenue growth. But the growth also reflects increasing output from a variety of sectors and has taken place across a number of regions. Success has not been siloed. Sustained growth has also continued throughout the global financial crisis and despite natural declines in output from maturing mining activities. The biggest cause of optimism in the PNG economy is the upcoming LNG gas project which comes online in 2014. At its peak, the project is expected to increase real GDP by 25 per cent. In 2010 revenu

HAMISH MCDONALD, Sydney Morning Herald POLITICIANS often count on the public having a short memory span, but a record was set this week by Papua New Guinea's Prime Minister, Sir Michael Somare. The ''Grand Chief'', as the independence-transition leader is honoured, returned to office explaining he had been away on holiday to use up his accrued leave. This struck a lot of his countrymen as odd, because when he left work five weeks earlier, they distinctly remember him saying he was standing aside to face a tribunal that would decide if he had violated leadership rules. Some unkind reporters dug out the press release from his office which said Somare said would ''now voluntarily step aside and allow the Deputy Prime Minister, Sam Abal, to assume full function and responsibility of the Office of the Prime Minister while he attends to clearing his name''. Somare has been referred to a leadership tribunal to face charges that he didn't submit statemen

HAMISH MCDONALD, Sydney Morning Herald POLITICIANS often count on the public having a short memory span, but a record was set this week by Papua New Guinea's Prime Minister, Sir Michael Somare. The ''Grand Chief'', as the independence-transition leader is honoured, returned to office explaining he had been away on holiday to use up his accrued leave. This struck a lot of his countrymen as odd, because when he left work five weeks earlier, they distinctly remember him saying he was standing aside to face a tribunal that would decide if he had violated leadership rules. Some unkind reporters dug out the press release from his office which said Somare said would ''now voluntarily step aside and allow the Deputy Prime Minister, Sam Abal, to assume full function and responsibility of the Office of the Prime Minister while he attends to clearing his name''. Somare has been referred to a leadership tribunal to face charges that he didn't submit s

THE NATIONAL KEY aid donors, partnering the government in infrastructure development, are threatening to re-direct their aid programme unless the national government moves swiftly to restore integrity and transparency in its tender procurement and financial accountability systems and processes.  Sources within the donor community revealed last night that AusAID was not particularly keen to continue with the current manner of engagement with the government after a three-year major road maintenance contract under its transport sector service improvement programme (TSSIP), which would have started in 2009, fell through due to political heavy-handedness and interference.  The project involved the resealing and maintenance of a part of the Highlands Highway between Lae in Morobe and Goroka in the Eastern Highlands. Reports said in 2009, AusAID’s “no objection letter” recommended a K53 million bid by Shorncliffe, a well established and reputable road sealing company in PNG, to