OVERSPENDING THE CURSE OF PNG, SAYS PM

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PORT MORESBY, Papua New Guinea (May 8, 2000 - Post-Courier/PINA Nius Online)---The national economy is poor in spite of the country's export earnings because of overspending, Prime Minister Sir Meeker Murata said.

He told Parliament that governments had been printing and overspending money domestically, creating the economic mess.

He was answering a series of questions from Robert Angle (Mul-Baiyer) who wanted to know where all the money from the rich resource projects had gone.

Mr. Nagle claimed the funds were locked away overseas by these resource developers, and called on the Government to review laws and agreements to bring this money onshore.

In response Sir Mekere said, "These are (the same) questions many Papua New Guineans have asked and are asking.

"I know that the exports are between K 3 to K 4 billion (US$ 1.188 and 1.584 billion) a year in foreign currency. I think Papua New Guineans are right in saying, when we are earning so much, ‘Why are we short of foreign reserves? Why is the kina weaker.’

"When the kina and the Australian dollar were separated, when we had our own currency, we did not have K 3 billion exports at that time, and yet the kina remained on par with the Australian dollar at introduction, and was even stronger at one stage."

"It was stronger than the U.S. and Australian," he added.

"The reason is that we have not managed our economy well. That's the reason," Sir Mekere said of the current weakness of the kina.

"We have printed money. We have overspent money. The more we spent domestically in kina, whether we print it or somebody else does it… the more we print and spend money locally, overspend, throw our budget out, the more we use our foreign reserves because the economy is so fatally dependent on imports.

"So the answer is simple. However we produce, if we don't retain fiscal discipline, if we go on printing and spending more, doesn't matter how much we earn in foreign reserves, the kina will always remain weak."

"What we are doing now, nine months ago and this year, is putting the platform again, delivering what we want to deliver."

On the claim of money being held offshore, Sir Mekere said all except a portion of foreign earnings by companies are left overseas to pay off loans and for imports such as technology used for production.

 

ASIAN DEVELOPMENT BANK SAYS PNG FARING BETTER

PORT MORESBY, Papua New Guinea (May 8, 2000 - Post-Courier/PINA Nius Online)---The Asian Development Bank has commended Papua New Guinea for recording a growth in its Gross Domestic Product last year despite suffering the "effects of economic mismanagement by the previous government."

The ADB said in its 1999 report released this week that the country's GDP recorded a growth of 3.9 percent last year.

"Papua New Guinea recorded an estimated real GDP growth rate of 3.9 percent in 1999, despite suffering the effects of economic mismanagement by an administration that lost office in July," the ADB said in its report.

The regional development bank attributed the growth to improved commodity prices and increased export volumes.

"Growth in merchandise exports contributed to an improved current account balance, but the external reserve position remained the same throughout the year with import cover of only one month," the ADB said.

"However, the inflation rate increased to 16 percent mainly due to a 26 percent currency depreciation."

It said that after a long period of political instability, "the new government with their strong support promised to among other things, restore and sustain macroeconomic stability, revitalize the economic reform process and revive business confidence."

In line with that, the ADB said fiscal policy was tightened in the August 1999 supplementary budget, which was aimed at reducing the budget deficit to 1.6 percent of GDP, and this was endorsed by the International Monetary Fund.

The supplementary budget provided for cuts to the government's development expenditures, revenue-raising increases in gaming taxes, log export taxes and excise on petrol, alcohol beverages, tobacco and luxury motor vehicles.

The bank said these measures generated a surplus in the second half of 1999, leaving a deficit of 1.6 percent of GDP for the whole year, funded by external borrowing.

ADB is also taking a leading role in assisting the Government with design and the implementation of the public sector and improve performance.

For additional reports from The Post-Courier, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The Post-Courier (Papua New Guinea).

Pacific Islands News Association (PINA) Website: http://www.pinanius.org 

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