WORLD BANK, IMF GIVE PAPUA NEW GUINEA LIFELINE

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PORT MORESBY, Papua New Guinea (Oct. 9, 2002 - Papua New Guinea Post-Courier/PINA Nius Online)---The World Bank and International Monetary Fund have agreed to help lift Papua New Guinea out of its economic woes.

Both organizations are to send missions later this month to assess the country's macroeconomics, its fiscal outlook and the 2003 budget to draw up a country assistance strategy.

Treasury Minister Bart Philemon and Public Service Minister Dr. Puka Temu indicated yesterday that both missions will arrive in two weeks.

They will work with Papua New Guinea officials led by Treasury Secretary Koiari Tarata.

The new government led by Sir Michael Somare is seeking K470 million to bridge the financing gap in the 2003 budget (357.2 million in offshore debt-servicing and a K112.8 million budget deficit)

The government has to raise K277 million of that externally through the support of the World Bank and IMF primarily and then from Friends of PNG at a consultative meeting set for early next month.

Philemon and Temu traveled to Washington recently to attend the annual meetings of the Bretton Woods Institutions. After this they also met with IMF, World Bank and Australian government officials on support for the medium-term development objectives of the government.

"The fund team have been very impressed with the meetings … (and that the ministers) have been very successful in engaging the full support of the fund," Papua New Guinea IMF executive director Mike Callaghan said.

Work on fast-tracking the release of US $30 million already discussed with the World Bank to fund the Highlands Highway Rehabilitation Project will be high on the officials’ discussions.

Philemon said the government wants this work fast-tracked and completed within the 2003 financial year.

He said the IMF had committed itself "broadly to assist with the balance of payment and foreign exchange reserves and would be working on this." The World Bank "would concentrate on the Structural Adjustment Program with specific emphasis on the Public Sector Reform Program.

"We are living beyond our means," Philemon said in relation to focus on expenditure controls and procurement of goods and services the World Bank would focus on.

The PNG delegation of Tarata and Anthony Yauieb also met with Australian Treasurer Peter Costello. He was convinced to have a portion of the annual Australian $300 million aid channeled through AusAID under the development budget.

Philemon said the IMF’s commitment was vital as that would signal other aid donors to come on board.

In the November meeting with Friends of PNG, the government hopes to draw a commitment from each of them on how much they can help out with.

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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