IMF: PNG suffers from poor governance

PAPUA New Guinea has enjoyed a decade of solid economic growth but suffers from week infrastructure and problems with governance and crime, the International Monetary Fund (IMF) has reported, The National reports.

Following a May 18 visit to the country, the executive board of IMF concluded that the solid performance was supported by greater political stability, a sound fiscal framework, and a healthy banking sector.

Despite its commendable performance, PNG remains “a low-income country highly exposed to commodity price fluctuations”, the IMF said.

The report stated in part: “The economy has weathered the global recession relatively well and real GDP growth is estimated to have picked up from 5½% in 2009 to 7% last year.

“Higher commodity prices and the construction of a liquefied natural gas production facility (LNG) – a 190% of GDP project – have boosted the economy, while banks continued to provide finance, and agriculture production rebounded.

“However, the country’s infrastructure–roads, ports, and utilities–has shown signs of capacity constraints, and bottlenecks have appeared in the markets for skilled labour and land.

“Inflation has reached 7.8% at end-2010 and is increasingly driven by domestic demand.

“Higher commodity prices boosted revenues last year, at the same time spending from off-budget accounts slowed.

As a result, after the deficit had reached 9½% of GDP in 2009, a balanced budget was almost achieved in 2010.

“The Bank of Papua New Guinea has kept the policy interest rate at 7% since end-2009.

However, monetary conditions loosened as short-term interest rates declined to around 3% and the nominal effective exchange rate depreciated by more than 7% in 2010.”

Banks, although well capitalised and liquid are vulnerable to a possible correction in property markets, the IMF said.

Although commodity prices and exports recovered in 2010, the current account deficit has widened to 24% of GDP.

It was, however, largely financed by foreign direct investment related to the LNG project.

External debt declined to about 11% of GDP last year.

The IMF directors considered the near-term outlook to be generally favourable but encouraged the authorities to consider tighter macroeconomic policies in the face of rising inflationary pressures.

“Over the longer term, it would be important to reinvigorate structural reforms to support the development of the non-mineral sector, while ensuring effective use of mineral resources to sustain economic growth and raise living standards,” the report states.

The directors stressed the need for tight fiscal policy during the construction phase of the liquefied natural gas plant.

They welcomed the agreement on a balanced 2011 budget and recommended strict adherence to budget allocations and the limit on trust account spending.

The IMF advised that it would be prudent to save windfall mineral revenues and use part of such resources to reduce government debt.

Further the directors welcomed the government’s plan to manage resource revenues through a sovereign wealth fund (SWF).

They stressed that the SWF should be well governed and adhere to the Santiago Principles to ensure effective management and use of the resources.

They considered it important to integrate use of the resources in the SWF into the budget and macroeconomic framework.

 

Touch of Papua New Guinea

Pacific Partnership 2011 mission commander Capt Jesse Wilson (of the USS Cleveland) is given a last PNG traditional escort by a young highlands lass as he marches up to the podium for his final remarks about services provided to help improve the quality of life in Lae city, The National reports.

The US mission crew was in the Morobean capital for the last two weeks, providing humanitarian services to about 11,000 people.

They were farewelled at a closing ceremony at Igam barracks yesterday.

 

PNG ratifies interim EU pact

PAPUA New Guinea  has ratified the interim economic partnership agreement (IEPA) with the European Union (EU) giving effect to the full application of the partnership agreement which has been on a provisional basis, The National reports.

Minister for Foreign Affairs, Trade and Immigration Don Polye’s intervention for the parliament to waive the normal 10-day requirement for ratification process was granted last Tuesday.

Polye thanked the members of parliament for the foresight and cooperation to enable the legislative process to be secured which he said would ultimately benefit the people.

Polye said the government had achieved another historic milestone in its diplomatic relations to generate maximum impact and benefit for the people in the conduct of its relations with the EU.

“I am very satisfied that the MPs have given me the required support to meet our legislative requirements to effect this contractual obligation on our part as the European parliament had met its legal obligations in January.

“I had, therefore, sought parliament waiver of the normal 10-day requirement for ratification process for the interim EPA, between the Pacific Islands and the European Union ratified without delay. I am happy that parliament has granted its approval,” Polye said.

He said PNG signed the interim EPA in 2007 to continue to protect the preferential access for our substantial export interests of fisheries and other marine products, palm oil, cocoa, coffee and rubber to the EU markets.

He stressed that PNG-EU relations over the years had been governed by a series of conventions between the Africa, Caribbean and the Pacific (ACP) states and the European Union. 

The current convention is known as the Cotonou convention.

“These conventions over the years have provided for generous benefits including provisions on development cooperation and trade. 

“The trade provisions in the various conventions were particularly favourable to the ACP including PNG because of the preferential duty free market access ACP products enjoyed in the European market.  In that connection, it should be noted that the balance of trade has always been in PNG’s favour. 

“For instance, last year, it was  448 million euro in PNG’s favour at the exchange rate of 0.2910 to K1.”

 

Review memorandum of agreement, Abal and O'Neill ordered

National Court orders Abal and O'Neill to look into 1996 deal

 

By JACOB POK

 

ACTING Prime Minister Sam Abal and Minister for Finance Peter O'Neill have been ordered to personally take steps to review a 1996 memorandum of agreement signed between the state and Kutubu landowners of PDL2, The National reports.

The National Court yesterday said failure to do so could result in contempt charges against the state.

The state was given until June 17 to review the expired agreement.

Justice Ambeng Kandakasi then issued interim restraining orders stopping Mineral Resource Development Company (MRDC) from facilitating payments of MoA funds to Kutubu landowners.

The orders followed an application by the plaintiffs, including former Southern Highlands governor Hami Yawari and landowners of PDL 2.

The issue arose from a newspaper statement by Abal that all MoA payments would be facilitated by MRDC.

Lawyers for the plaintiffs opposed that and told the court that the 1996 MoA did not allow for MRDC to make payments of funds to the landowners of PDL2.

They said the payments were to be made directly by the state to landowner groups and companies.

The state lawyer told the court he had not received any instructions on the matter, but argued there was no evidence on the part of the plaintiffs to verify that MRDC would facilitate payment as who would facilitate payment was still undecided.

Kandakasi told the state lawyer there was a media article by Abal saying that payment would be made by MRDC.

He asked why the MoA of 1996 still had not been reviewed.

Kandakasi referred to earlier proceedings where state lawyers failed to turn up in court with state officials when instructed to do so.

"The defendants have shown no interest in the matter.

"It is time people are dealt with for contempt."

He said the state had provided MoA funds to MRDC without discussing the issue with landowners.

"These are all wrong and contemptuous," Kandakasi said.

He ordered Abal take personal steps to have the memorandum of agreement reviewed no later than June 17.

He said this was to maintain the status quo and failure to do so could result in contempt.

 

Atoi wins in Bougainville

By STEPHANIE ELIZAH

 

THE people of North Bougainville have elected their new national member of parliament. He is Lauta Atoi, a businessman of mixed Mortlock and Tasman parentage, The National reports.

Atoi, with 10,463 votes, won by 5,301 beating only female candidate Rachael Opeti Konaka, who completed the contest on 5,162 votes.

He now occupies the North Bougainville open seat left vacant by former member and Governor-General Sir Michael Ogio.

Bougainville Electoral Commissioner and North Bougainville by-election returning officer Reitama Taravaru, in thanking the Papua New Guinea and Bougainville electoral commission officers, police and the candidates and their supporters, said, generally, the election was peaceful and carried out with respect.

“Having being satisfied with the process on our part, that the by-election was fair and transparent, I have taken into account all the votes cast and I declare our new member-elect Lauta Atoi,” Taravaru officially declared in Buka yesterday.

Atoi, in accepting his new role, thanked everyone for their support and acknowledged members of the New Bougainville Party and churches in Buka for their prayers and assistance.

To all his voters and campaign team, he urged they stay focused on their primary reason for contesting the by-election.

“This win is just the beginning of our journey. Let us stay focused on the immediate needs of our people,” he said.

“We need to complete all incomplete projects of our former member like delivery of water tanks and assisting our people in the West Coast atolls.

“Let us concentrate on putting all monies into these immediate projects; 2012 can take care of itself.

“Our medium- and long-term plan is to boost economic growth in our region,” he said.

“There is no time to celebrate, we have six months to take care of our people. I stand with confidence, yes, I can lead, it is time for a change.”

He invited the candidates who lost and their supporters to work closely with him.

“I have seen your platforms during the campaign period.

“You have very good ideas which we can together work on and move Bougainville forward,” Atoi said.

 

Freeway ban ignored

By ANGELINE KARIUS

 

TRUCKS and semi-trailers are still accessing the Poreporena Freeway despite a ban imposed by police last Thursday, The National reports.

Deputy police commissioner and operations commander Fred Yakasa said roadblocks operated by his men appeared to have failed.

He said there were logistical problems involved in stationing his men at the designated Konedobu and Hohola roundabouts to divert trucks and semi-trailers using the freeway.

“It is not working. I will have to look into this and try to station officers at designated routes to continue monitoring the highway,” Yakasa said.

He said the ban imposed by police was over public safety fears and to protect commercial houses and properties along the roadside.

“I call upon respective transport operators to do something about it and impose measures for motorists and public accessing the freeway.

“Police have tried but it has not worked. We all have to do something.

“The Poreporena Freeway is a death trap. That is what everyone needs to understand,” Yakasa said.

It is understood that no formal meeting with transport operators had been held since the ban was imposed.

National Road Safety Council director Frank Aku had condemned the action by police.

He said the ban on the freeway needed to be approved by the relevant authority before it could be imposed.

“This is public road to be used by all vehicles,” he said.

 

Breakthrough against potato disease

Caption: Tubers of NP 02, one of the PLB-resistant varieties pre-released by NARI to the farming community early this month – Picture by ANTON KERRU

 

By JAMES LARAKI of NARI

 

THE farming community now has the opportunity to trial new potato varieties after the National Agricultural Research Institute (NARI) officially made a preliminary release of two varieties resistant to the late blight.

The varieties referred to as NP1 and NP2 (NP stands for NARI potato) were pre-released during the agricultural innovations show early this month along with a broiler feeding system and two cold-tolerant rice varieties for the highlands.

The preliminary release of the two varieties will be sigh of relieve to smallholder farmers who have been unable to grow the crop after it was completely wiped out by the potato late blight (PLB) disease in March 2003.

The potato industry worth about K25 million at that time has not recovered fully as the common variety Sequoia is still very susceptible to PLB.

After the outbreak caused by a fungal agent, Phytophthora infestans, the Sequoia variety could not be grown by ordinary farmers due to the cost of weekly fungicide treatments.

The Sequoia is highly susceptible to the late blight and potato production has been limited to a relatively small number of commercial farmers who could afford chemicals, backpack sprayers and seed potato.

Subsistence farmers, particularly in the highlands where the crop is usually grown rely on potato as an important crop.

Potato is not only a commercial crop but is also a source of food next to sweet potato (kaukau), particularly in the high altitude highlands where the choice of staple food is limited.

In a view to revive the industry, particularly the smallholder farmers in mind, NARI initiated a project in 2003 with funding support from the Australian Centre for International Agricultural Research to evaluate blight resistant varieties.

The objectives of the project were to introduce, multiply, evaluate and deploy late blight resistant clonal material into PNG and to develop safe, cost effective integrated late blight management strategies for existing and new potato cultivars and ultimately to rehabilitate potato production for smallholders.

Under the project, NARI sourced 59 International Potato Centre (CIP) clones in 2003 and evaluation work has been undertaken at various sites to asses late blight resistant and yield.

 Of the 59 clones, 12 clones where selected and further evaluated against Sequoia both on station and on-farm.

The two varieties pre-released have proven to be late blight-resistant, high yielding and have other favorable agronomic traits such as good taste and processing quality.

These were observed through on-farm farmer participatory trials covering some 15 sites over three seasons in Enga, Western Highlands, Simbu, Eastern Highlands and Morobe (Kabwum) provinces.

The pre-released varieties have been subjected to a wide range of farmers and general public for their comments and views, both at the growing and harvesting stages.

Many farmers have already shown their approval and are into growing them, including seed production.

The Enga rural potato project based in the Lagaip-Pogera district, an initiative of its local Member of Parliament has ventured into seed production with a view to reviving the crop in the district and the province as a whole.

This is seen as a good initiative as the adoption of new potato varieties by farmers depends on the availability of a consistent supply of quality seed potatoes.

The late blight disease remains a concern to the potato farmers, especially in the highlands where the crop is popular and usually grown.

The fungus is a specialised pathogen of potato and is an extremely-destructive disease of potatoes.

It attacks both tubers and foliage at any stage of development and is capable of rapid development and spread.

It was responsible for the devastating Irish potato famine of the 1840s and has continued to be important to the present.

Since the Irish famine, late blight became the most-studied potato disease in the world.

Previously free of the disease, PNG was one of the world's few remaining safe havens for growing potato until 2003.

The entire potato crop was wiped out in a matter of weeks after it was first discovered in the Sirunki area of the Enga province leaving a trail of destruction.

The blight is believed to have come across from the neighboring Indonesian province of Irian Jaya.

Yield losses caused many smallholders, who relied on potato as a valuable cash and food crop, to withdraw from production, leading to an increase in potato prices in the country.

Some breakthrough has been made to control PLB using fungicides, however, the extra input has been a burden to smallholder growers and identifying suitable varieties was the long lasting solution to revive the potato industry.

NARI with support from other partners have taken on this responsibility and the preliminary release of the two varieties is an outcome of the efforts to assist smallholder growers and to reviving the once-thriving industry.

It is now hoped that smallholder farmers will now be able grow their favourite crop once again with the preliminary released materials as additional inputs requirements associated with the Sequoia variety has denied them.

The preliminary release of the blight resistant varieties is a breakthrough against the devastating potato disease and it is now up to the farming community to try the varieties in their farms and adopt them from their own judgments.