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By Staff Reporter : PNG Today

PNG is in Economic Management crisis

Papua New Guinea Opposition’s shadow cabinet has declared this week that the country’s economy is in a fiscal cash-flow crisis.
The Opposition Leader Don Pomb Polye announces his shadow cabinet decision that the nation is facing an economic management crisis.
Consequently, fundings are not going into providing basic goods and services for the citizens, taking into consideration that PNG is one of the very few countries, which has not met the Millennium Development Goals.
Mr Polye said that it is very evident PNG’s economic affairs are being run on an ad-hoc manner without much understanding on the contemporary economic condition today.
State departments like the Health, Education, Universities and Works are not getting their full monthly cash flow certificates (CFC) to deliver the needs of the people.
Some statutory organizations and state bodies have not received fully their operational funds.
Members of Parliament including the Ministers of State have not had their full salaries enter their personal bank accounts for more than three months.
Public servants are suffering silently as fortnights have gone by since last September that they have not received their full pays.
Embarrassingly, PNG’s diplomats and their staff overseas have not received their full pays and other fundings as well.
The Bank of South Pacific (BSP) informs that the salaries of public servants have not gone into the bank up to last night. BSP reports that such is the first of its kind.
Drought victims have not had the appropriate help given to them during their most desperate time of need. Some have endeavored to live on clay and grass, and herbs while others died unnoticed.
Young men and women are collapsing everyday by easily preventable diseases. Mothers and children have lost hope of government help in health and education.
The Bank of PNG in its monthly economic report for November and December 2015, and January 2016 illustrate that the government’s cash flow is expected to remain in significant deficit for some time.
Now with the International Monetary Fund (IMF) downward revision of global economic growth and continued sliding of oil prices, BPNG’s forecast makes much sense. Mineral and Petroleum prices to remain very low this year only to make the cash flow problem worse.
The situation is exacerbated by the fact that the demand for the government bonds in the domestic market has dropped according to the BPNG and Treasury projections.
Whether the international market will buy the sovereign bonds or not is yet to be seen although it will cost the state so much.
“My shadow cabinet is of the strongest view that the economic situation in PNG, being a fragile economy, is deteriorating quite fast,” said Mr Polye.
Mr Polye expressed concerns that when the economic situations are not favorable in PNG, we have seen an escalation in crime, committed both by the good, well-to-do citizens and the bad, chronic criminals.
The Police and our law enforcement agents will have up-scaled challenges to keep under control in this field.
Mr Polye expressed grave anxiety that human rights and justice can be undermined when living conditions become difficult and people’s well-being are abused.
Therefore, the shadow cabinet resolved that;
1. The executive government reviews the 2016 National Budget and makes urgent adjustments to concentrate on basic life and death items and, goods and services. The executive government is urged to focus on Health, Education, Infrastructure maintenance, power and tele-communication. The government is advised to put on hold all capital expenditure items as there is no liquidity to stimulate growth.
2. The Liabilities to the state like the UBS loan and other commercial loans taken be addressed as a matter of urgency. This single loan engagement, K3 billion UBS loan was a big mistake that impacts so badly on PNG’s economy today during a global economic recession, creating a domestic economic crisis and fiscal operation nightmare! The alternative policy approach of the alternative government was to invest all income from the sale of our LNG off-shore in a stable market through the Sovereign Wealth Fund, thence to apply such savings during cash flow situation such as PNG is experiencing today. If this concept had been adopted by the government, we would have had a domestic economy sound enough to absorb the global economic shock we are experiencing now. The 10.1 per cent shares in the Oil Search Limited share be sold to free up PNG of this liability to prevent immediately the deprivation of PNG of the much needed cash from the PNG LNG sales which is tied to the Escrow Account in Singapore. For example, well-informed insiders in the financial system inform that a K300 to K400 million was paid to the UBS Escrow account last Friday and yet another K300 to K400 million was paid to the same account in Singapore on Monday (15 February).
3. Programs should be established immediately to facilitate manufacture and usage of locally produced items like the building materials and gradually cut down on imports. SMEs should be given the task to produce and supply local products. The concentration of contract works and businesses by the O’Neill government on a selected few companies has drained PNG of wealth as funds have been sent off-shore.
4. The Speaker and the Governor General be informed to recall Parliament earlier than scheduled to address the fiscal/cash flow crisis at hand. Under the Constitution, any decision to recalling of Parliament is a prerogative of the Cabinet could discuss the option with Prime Minister. These are times the leaders need to think outside of the box in the best interest of the country. Where the executive government and state actors are complacent or less proactive, the powers of the house must be reactivated so that the directions are given by the 8 million people of PNG for and on their behalf through their MPs.
I am very concerned with the magnitude of untrue statements or lies said by secretaries of state that give a completely false picture of the fiscal operations of the O’Neill government. I am also very saddened that inadequate and untimely release of funds by Treasury and Finance continues to imperil services to our people and pay pensions to the government workers.
In conclusion, the alternative government is very serious about solving the crisis we face today and creating a firmer foundation for PNG for the long future.

Posted by Staff Reporter : PNG Today on 1:58 AM. Filed under , , . You can follow any responses to this entry through the RSS 2.0. Share this Article

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