PNG Is Not Broke: Treasury Secretary Declares

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Pacific Islands Development Program, East-West Center With Support From Center for Pacific Islands Studies, University of Hawai‘i

Vele: Growth of 9.9% last year among the best in the world

By Gorethy Kenneth

PORT MORESBY, Papua New Guinea (PNG Post-Courier, Feb. 18, 2016) – Papua New Guinea is not broke, says Treasury Secretary Dairi Vele.

He said this at the 2016 Leadership Summit in Port Moresby yesterday.

To back his statement, Mr Vele said in an in-depth presentation of the state of the economy that the economic growth was among the highest in the world.

"Let me tell you again today that Papua New Guinea is not broke," he said, adding that the economy was estimated to have grown by 9.9 per cent last year, driven by the ramp up of the full year of the liquefied natural gas (LNG) production.

PNG’s debt to gross domestic product was lower compared with other similar economies, Mr Vele said.

"While the gas sector has supported the growth, the mining and quarrying sector is estimated to have contracted due to the shutdown of the key mines. In addition, activities in agriculture and other non-mining sectors of the economy are also anticipated to have weakened in 2015," he said.

Mr Vele admitted though that low commodity prices, adverse effects of droughts and the shutdown of the Ok Tedi mine in Western Province had provided setbacks to growth.

[PIR editor’s note: On Jan. 18, 2016 PNG Post-Courier reported that ‘Whilst the Government gave its assurance that the country was not broke, public servants nationwide were not paid their fortnightly wages. ... There was panic yesterday when many public servants who normally get paid on Wednesday found out that their forthnight salaries were not in their accounts. ... Some called the Post-Courier and bitterly complained that the country was broke and that the Government could not meet its obligation to pay its servants. ... But Finance Secretary Dr Ken Ngangan when contacted brushed aside these claims and assured all public servants that they will be paid. "All public service pay will be processed first thing tomorrow (Thursday) morning. ... The delay has been an IT glitch that is now being worked on. Meanwhile this week’s pay is being processed manually."’]

"In 2016, growth is still projected to be positive but not as strong as 2015 and the past eight years," Mr Vele stated.

"This is because activities supporting growth such as higher commodity prices and construction of the PNG LNG Project have come off in addition to LNG production reaching its full capacity and commodity prices trending at low levels.

"However, the economy will continue to be supported by the traditional drivers such as the agriculture, forestry and fishery and the mining sector, with Ok Tedi expected to resume production in 2016," he explained.

"The economy in 2016 will be supported by the anticipated pick up in the global economy and the preparations for the APEC (Asia-Pacific Economic Co-operation) 2018.

"Over the medium term, the economy is projected to maintain similar growth trend as 2016, driven by the traditional drivers of the economy.

"Over the medium term, the economy is expected to adjust to traditional drivers in the non-mining sectors, an aftermath of a boom and bust periods of the construction and production phase of the LNG project," he said.

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