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THE DECEPTION: Little Mongoloid Treasurer And His Bandit Of Caucasian Advisors

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by Therow Zuaru ▪️IMF Structural Adjustment Politics The global economic and financial system is a system of lies, deception and predation on a large scale. The World Bank, IMF keep the public in a position of indentured servitude, through perpetual debt, inflation and interest. The basic scam is simple: Put a country in debt either by its own indiscretion - or through corrupting the leader of that country - than impose "conditionalities" or "structural adjustment policies" often consisting of the following: • Currency devaluation - when the value of a currency drops, so does everything valued in it. This makes indegenious resources available to preditor countries at a fraction of their worth. • Cut social programs - large funding cuts for social programs. This usually include education and healthcare - compromising the wellbeing and the integrity of the society - leaving the public vulnerable to exploitation. • Privatization - privatization of state owned enterpris…

PNG FACES A TOUGH ROAD AHEAD

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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%.

Positive proc…

KEY QUESTIONS FOR INVESTORS IN PNG

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by PAUL FLANAGAN

Following are three key questions which potential investors should be seeking answers for at the PNG Investment Conference being held in Sydney on 7 and 8 September.

First, what are my peers doing?

While a good business investor will be open to finding a niche market with great potential, it is relevant to know what their investment peers are doing.

There was a rather disingenuous Bloomberg article last week titled “Australia Would Rather Invest in Papua New Guinea Than in China” – see here. A more comprehensive set of figures, based on total Australian investment in these countries is shown in the graph below.

[Source: Australian Bureau of Statistics Catalogue 5320 Table 5 issued 10 May 2017.]
Three key elements.  First, one should consider more than just direct investment.  This dominates the PNG picture but is a much, much smaller element than in China where investment options are much more diversified. Second, investments in Hong Kong are also relevant to the compa…

PNG – CHANGE NEEDED TO MEET PEOPLE'S POTENTIAL

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by PAUL FLANAGAN

Summary
PNG politicians are failing their people. Their poor policies have led to dramatic declines in economic well-being – an extraordinary fall of over one-third since 1980.
This is revealed by applying new numbers from the PNG National Statistics Office (NSO) and International Monetary Fund to PNG’s economic history.
From 2012 to 2017, under the O’Neill government, average economic well-being for the people of PNG has declined by 2.8%.
This reverses positive economic gains of 8.4% from 2000 to 2012.
PNG is returning to the poor economic performance it experienced during the 1980s and especially the 1990s – lost decades for development. This is a shame.
From 1980 to 2017, economic well-being in PNG per citizen declined by an extraordinary 40.4%.
This is a development failure.
In contrast, the resource sector has grown strongly.  It is now 48.1% larger per capita than in 1980. The resource sector boomed by 62% during the 1990s when the non-resource se…

PNG’S BUDGET DEFICIT BLOW-OUT OF K628 MILLION

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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 improve public fi…

PNG’S ‘WEAK’ INTERNATIONAL ECONOMIC SITUATION

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by PAUL FLANAGAN SummaryThe 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 position. However, for…

PNG STRONGLY DEFENDS WITHHOLDING OF IMF ARTICLE IV REPORT TO COVER FOR MISSING K6.3 BILLION KINA

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by PAUL FLANAGAN

SUMMARY
The IMF report indicates the O’Neill government has overstated the growth rate in the PNG economy by 12.7 percentage points during its term.
Primarily by 5.9 percentage points in 2014 and a further 5.2 percentage points in 2015 (see graph below).
The IMF indicates the PNG economy is K6.3 billion smaller in 2017 than claimed by the government (and K5.4 billion smaller in 2016).
This means the debt to GDP ratio is 33.5% in both 2016 and 2017 according to the IMF – above the 30% limit set in the Fiscal Responsibility Act.
The greatest concerns about economic management relate to BPNG’s control of the foreign exchange rate and reserves with more breaches of international norms than admitted.
The Governor of the BPNG should explain serious discrepancies between his statements on 25 January (full page adds in the local press on 26 Janaury) and what the IMF report actually stated on 27 January (see below).
While commending the government for its actions in the 2016 Su…

IMF Article IV Suppression – A Poor BPNG explanation - MORE GOVERNMENT COVERUP

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by PAUL FLANAGAN

The Bank of PNG, the legislatively independent central bank for the country, lost significant credibility in its recent justification for why PNG has joined the bottom 2 per cent of countries in refusing to release the standard IMF Article IV report on countries (see here).  It remains the only country in the East Asia and Pacific not to release an IMF Article IV report undertaken in 2016.
BPNG provided six “critical issues” for refusing to release the report.  However, on closer examination, there was only one critical issue (fake GDP numbers used by the PNG Treasury).  And that should be the responsibility for the PNG Treasurer to release a statement on why the PNG was suppressing an independent assessment  by the IMF of the PNG economy.
What is the O’Neill government trying to hide on its management of the PNG economy?
International investors will easily through see this statement. PNG’s economic standing and credibility has received a severe down grade wi…

FRIGHTENING GOVERNMENT PERFORMANCE IN 8 KEY AREAS OF THE ECONOMY

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NATIONAL BUDGET SPOOKS PRIVATE BUSINESS AND INVESTMENT IN PNG

byWILSON 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  over GDP economic gro…