SOMARE SAYS PNG ECONOMY IS HEALTHY

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Four percent growth expected in 2009

PORT MORESBY, Papua New Guinea (PNG Post-Courier, May 5, 2009) – Prime Minister Sir Michael Somare has assured the Australian business sector that Papua New Guinea’s economy is healthy.

Addressing the PNG/Australia Business Conference in Brisbane last Thursday, Sir Michael said that despite the global economic downturn, PNG was expected to achieve a growth rate of 4 per cent this year.

He added that PNG had K3.3 billion [US$1.2 billion] in trust accounts and its foreign reserves stood at K5.8 billion,[US$2.1 billion] which equated to 11 months import cover.

Sir Michael said his Government was committed to doing "whatever it takes to keep the economy that way".

"Our debt has been reduced from 70 per cent to 30 per cent of gross domestic product (GDP) and the country’s infrastructure developments related with the gas projects will further help stimulate the economy," he said.

The Prime Minister said that due to high commodity prices and good economic management in the last few years, PNG had amassed budget surpluses that would be used to prop up any shortfalls in development expenditures.

He said because too much spending would create further inflationary pressures, any fiscal stimulus to the economy must be undertaken in ways that would minimise the impact on domestic demand and inflation.

"Against this backdrop, the Government intends to inject around K1.8 billion into the economy in the first phase of its stimulus package to address the impact of the global economic crisis," Sir Michael said.

He said the Government would continue to maintain prudent debt management strategy in relation to external debt and public debt and other domestic liabilities would be repaid under the parameters established by the medium term fiscal strategy.

Sir Michael told the Australians that his Government would continue to pursue public service and macro-economic reforms, as well as implement the the public expenditure peview and rationalisation programs.

"Fiscal responsibility will be maintained and the District Treasury roll-out program will be continued, among other things," he said.

Papua New Guinea Post-Courier: www.postcourier.com.pg/

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