PNG ECONOMY SHOWS SIGNS OF RECOVERY

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PORT MORESBY, Papua New Guinea (The National, July 8) - Treasurer Bart Philemon has told Parliament that the Papua New Guinea economy is continuing to improve, with the inflation rate at its lowest in five years.

But Philemon likened PNG to a sick mother in intensive care that needs tender loving care.

In his state-of-the-economy address, given in the absence of Opposition members of parliament who boycotted Parliament yesterday, Philemon said most economic variables indicate a strong performance. The kina has performed strongly against the U.S. and Australian dollars.

He noted that on January 1, 2004, the kina was trading at 30 U.S. cents and 39 Aussie cents. In mid June, PNG currency appreciated to 31 U.S. and 45 Aussie cents respectively.

Over the same period, interests rates on treasury bills declined significantly from 16.91 percent to below 8.2 percent. Foreign reserves increased to K1.79 billion (US$555.7 million) in June from K1.6 billion (US$496.8 million) in January this year.

The annual inflation rate in the March quarter was the lowest in five years at 8 percent since recording the historical second annual highest of 20.8 percent in the corresponding quarter of 2003.

Philemon also reaffirmed the 2004 expected growth rate at 2.8 percent (higher than the population growth rate of 2.7 percent), which is expected to emanate from growth in agriculture, fisheries, forestry, the manufacturing sector, financing, insurance, real estate and business sector and electricity, gas and water.

He said the mining and petroleum sector is also expected to grow.

Philemon aid the economic forecast is not "mere book figures." It is a reflection of what is happening in all sectors of the economy under the leadership of the Somare government and it was unfortunate that the critics do not share the same outlook as the government and "the rest of PNG."

He said the favorable macroeconomic picture has translated into "tangible benefits for our people" in the drop in prices of four and tinned-fish and other items like clothing and footwear.

He said there has also been increase employment in Mamose, Islands and Highlands regions whereas it was negligible in the Southern region. The agriculture, fisheries and forestry sectors, where most people are engaged in, recorded the highest increases. No figures were presented to Parliament to support the increases.

"On the other hand, many businesses in Papua New Guinea are recording super normal profits and most are able to repay their loans to commercial banks in these favorable times while some businesses have expanded using their profits," said Philemon.

The government’s direct intervention in the economy also revitalized the financial system with the development of a micro finance and employment project with a model micro bank operating in Wau, the Kula Dinau in Port Moresby and in September another micro bank will be launched in Mt. Hagen by Finance Corporation.

There is an improvement of infrastructure across the country with maintenance of bridges and sections of the Highlands Highway and there will be better service delivery to the people upon completion of the public sector reform programs.

He said PNG is like a very sick mother who had been admitted to the intensive care unit. She has been very sick and has been on life support system.

"The doctors and nurses must work extra hard to keep her alive and restore her health. After 22 months of care and treatment, the life support system has been removed from her. But she remains sick and weak.

"She needs many more months and maybe years to recuperate before she can be expected to stand on her own feet again and go about to look after her family and contribute to the good of the extended family and the wider community."

July 9,2004

The National: www.thenational.com.pg/

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