PNGBLOGS

by PAUL FLANAGAN The press release from the latest mission of the world’s International Monetary Fund (IMF) – see here – highlights the difficult road ahead for PNG in dealing with recent years of bad luck and economic mismanagement. Challenges On the fiscal front, the IMF considers that the government will fail in the Supplementary Budget to bring the 2017 budget deficit back to the target of 2.5% of GDP. Rather, it estimates the deficit will be “a little over 3%” – so a gap of some K370 million relative to the 100-day target. The goal to reduce the debt to GDP ratio back to the legislated level of 30% as part of the 2017 Supplementary Budget is also recognized as infeasible. Instead, the suggestion is a medium-term objective of moving to a balanced budget by 2020 (and GDP growth will work to reduce the ratio). So the first two targets in new Treasurer Abel’s 100-day plan are likely to fail. Expected growth is also wound back from the 2.7% estimate in 2017 down to 2.4%.

by SAM BASIL MP Since the O’Neil PNC government took office five years ago, their mismanagement of the economy has been acknowledged by myself, representing the Opposition, on countless occasions, from the illegal UBS loan and a substantial decrease in  foreign reserves, to the lack of education and health foresight bestowed on Papua New Guineans. The lack of teaching facilities and lack of medicine as well as the manipulation of economic information on the status of our economy, is enough to inform Papua New Guineans that the O’Neil PNC government hasn’t prioritised the welfare of PNG’s population and the economy. Certain public servants are also responsible for their negligence, in conforming to the ill will of the coalition government and one of these public servants is the Governor of the Bank Of PNG (BPNG), Loi Bakani. His recent outrageous comment that the economy shouldn’t be a topic of discussion during the election, can only reflect his guilty conscience when visible

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 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

by SALMA KULI JACOB It is small wonder that the UPNG students burnt stacks of the toiletpaper dailies AKA The National and the Post Courier.   Both of them fail miserably at objective reporting or achieving any kind of balance in giving both sides of the story.  They’re both content with recycling government verbal diarrhea into certified Post Courier or National pekpek, without  checking out the accuracy of anything they’re asked to run.   IFC Loan Approved For PNG.   Or Was It?   The Post Courier led the way in unprofessionalism on 2 May with the following story: This news comes from the Bank of PNG which we all have come to see is in collusion with Peter O’Neill.  Mind you, no nation’s central bank should ever come under political pressure, because this erodes confidence in a central bank to do what’s best for the economy, no matter what the political fallout.  Unfortunately, the big picture of making decisions usually seems to escape our leaders and top level bureau

by FRANK KALUWIN PNG credit rating has been downgraded from B+ during the tenure of the National Alliance Party, To B- recently now B1 to B2, Even the Bank Of New York had withdrawn their Guarantee for Papua New Guinea. The World Bank is not stupid, they will not lend money to PNG because they know, as soon as the money lands on the PNG shores, Peter O'Neill open his back doors to benefit himself more than the country. However, the World Bank group will want to fund interventions directly instead just hand it over, that is if they do. If the World Bank  Group agree to loan the money; there will be no DSIP/PSIP for the MPs, we will then see the real colors as why all Members of Parliament  can't leave Peter O'Neill. Moody's Investors Service has today (25th April 2016) downgraded the Government of Papua New Guinea's (PNG) foreign currency and local currency issuer ratings to B2 from B1. The outlook on these ratings is stable. This concludes the review for