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Papua New Guinea vows to get rich in a decade
8:21 pm GMT+12, 17/06/2019, Papua New Guinea

Papua New Guinea’s new prime minister has an ambitious — cynics would say far-fetched — objective of turning one of the world’s poorest countries into the “richest black nation” on Earth in just a decade.
 
If national economies were like soccer teams, Papua New Guinea would be near the bottom of the table, struggling to avoid a relegation dogfight.
 
Violent crime and corruption are endemic, reliable electricity is rare and population centers sit like isolated city-states, surrounded by trackless jungle and mountain ridges that soar into the equatorial sky.
 
Papua New Guinea, though rich in culture, language and beauty, ranks 153rd out of 189 countries in terms of development, according to the United Nations — slightly better than Syria, marginally worse than Myanmar.
 
Prime Minister James Marape wants to change that. He has promised that within 10 years his compatriots will live in “the richest black Christian nation” in the world.
 
That is not going to be easy. The current titleholder is the highly industrialized economy of Trinidad and Tobago, where the average resident earns around 833 percent more than those in Papua New Guinea.
 
If the British territory of Bermuda were also included in the rankings, the task would be even more daunting.
 
Papua New Guinea’s economy would have to grow at a world-beating rate of around 30 percent per year, every year for the next 10 years just to catch up.
 
“PNG has never experienced 30 percent growth in the past — nor has any other country, for that matter, at least not for any sustained period of time,” said Maholopa Laveil, a lecturer in economics at the University of Papua New Guinea.
 
To reach his lofty goal, Marape appears to be betting on a surge in gas revenues, and on more of that cash staying in the country.
 
He has hinted that he may look to renegotiate a massive contract for liquefied natural gas with Total and ExxonMobil that would double national production to better benefit the local economy.
 
He has also promised to stop the export of unprocessed hardwoods and tackle corruption.
 
But the strategy comes with risks.
 
The World Bank has warned that even before a second LNG project comes online, the economy has “become increasingly concentrated in petroleum and gas-related activities.” That, the bank warned, raises Papua New Guinea’s vulnerability to the vagaries of international energy markets and natural disasters — like the 7.5 magnitude quake that froze production and stalled the economy in 2018.
 
Even the existing project PNG LNG — which started to flow in 2014 — has failed to live up to expectations. It required a controversial public loan worth more than US$700 million and helped national debt spike.
 
The project was forecast to increase GDP by over 97 percent, but according to Paul Flanagan — a former Australian government official who runs the influential PNG Economics blog — the increase has been closer to 6 percent. “Overall, the PNG LNG project massively over-promised and then failed to deliver,” one of his recent blog posts read. “For household disposable income, the prediction was an 84 percent improvement. The outcome is a decline of 9 percent.”
 
Flanagan believes that regardless of any energy boom, Marape — a former finance minister — will need to undertake difficult currency and trade reforms if the country has any hope of growing sustainably.
 
“Time will tell if the new government will tackle such difficult political economy challenges — challenges that must be addressed to make PNG a much richer black Christian nation,” he said.

SOURCE:AFP/PACNEWS


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