PAPUA NEW GUINEA HEADED FOR FISCAL COLLAPSE, CHAMBER WARNS

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By Colin Taimbari

PORT MORESBY, Papua New Guinea (August 1, 2002 - The National/PINA Nius Online)---Papua New Guinea has lost its way and is heading towards economic collapse, the Papua New Guinea Chamber of Commerce and Industry warned yesterday.

President Michael Mayberry, speaking amidst the jockeying by politicians to form the new government, said Papua New Guinea has to get its act together quickly.

Mr. Mayberry said the prolonged general election and its related problems were doing little to help the already worsening situation.

Mr Mayberry said, among other things, that:

* Businesses were closing down and investment has declined sharply;

* The kina is currently at its lowest level and falling;

* Shares of major companies have taken a plunge;

* Income is going down substantially for a lot of companies; and

* Overall economic activities in the country have declined.

He said: "This is because many foreign investors are now saying Papua New Guinea does not know what it wants and until it works out what it wants, we'll go elsewhere.

"We have to decide what we want for this country and what we want for our children and then work out what we want to achieve because if you talk to people, they don't know where the hell we are going."

Mr. Mayberry was asked to comment on the impact of the elections on the economy so far and the major issues the new government needs to tackle quickly.

He said the Government was broke and the country was at the crossroads. It needs to decide quickly where it wants to go and what it wants to achieve in a specific time period.

This is because "we are close to becoming another Argentina, where the economy has collapsed."

He said to stimulate the economy, the incoming Government must sit down and seriously look at its policies, if they are being implemented and are achieving their purpose. And if not, then why not.

Mr. Mayberry said the kina exchange rate, currently at its lowest level of 24 U.S. cents, was falling steadily. Income was going down, while expenses were going up because people are uncertain about what the future holds for this country, he said.

Shares for major companies have also taken a plunge, with Oil Search shares dropping to A$ 0.70 (US$ 0.38031), while Lihir shares were at A$ 1.15 (US$ 0.62479) after hitting A$ 1.65 (US$ 0.89644) a few weeks ago.

He said because of the high interest rates, companies are not making money so they cannot pay taxes to the Government. Unemployment was even higher with only five per cent of the total population employed in the formal sector.

"Income (revenue) is going down substantially and a lot of companies are having a hard time," he said.

"Economic activities for Papua New Guinea have declined substantially. We can't get all our money from foreign aid. We have to raise our own income and that means encouraging more investment."

Mr. Mayberry said the government must also cut down on excesses including the huge salaries for statutory heads. People have to start accepting responsibility because the bulk of the population of this potentially wealthy country are not benefiting, he said.

He said Papua New Guinea needs good Christian leadership for fairness so the people are happy.

"We must decide quickly on where we are going and what we want to achieve and have someone to lead us there," he said.

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

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

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