Prime Minister O’Neill Outlines Government’s Strategy to Deal with Global Commodity Price Pressures

The Papua New Guinea Prime Minister Peter O’Neill has highlighted the global economic challenges facing commodity exporting countries, and outlined how Papua New Guinea was confronting these pressures.

The Prime Minister said one of the most important matters in dealing with these issues is for the Government to be direct with citizens and the business community and outline the Government’s strategy.

“Like any emerging economy, we are faced with global challenges particularly from the lower commodity prices,” PM O’Neill said while speaking at the National Press Club of Australia.

“I do not want to sugarcoat the pressures that we are facing.We have an open dialogue so that we can understand how best we can confront these challenges,” he said.

While the price of commodities has risen in recent weeks, with oil now back over US$38 per barrel, the Prime Minister gave an overview of the impact of low commodity prices.

“The serious decline in world prices for our oil and gas, and our minerals over the past 12 to 18 months has had a serious impact on our economy.I am certain the Australian economy faces similar challenges."

PM O'Neill said that in Papua New Guinea, just a couple of years ago, royalties and taxes from the resource sector totaled close to two billion Kina and last year it amounted to just 260 million Kina.

“Barely one eighth of the previous year’s revenues, and we expect the same in 2016," he said.

To effectively manage these global pressures, PM O’Neill said the Government has revised budget estimates downwards and the country must live within the new normal.

He made the point that Papua New Guinea’s economic fundamentals are sound.

“We are deliberately running a deficit budget because we are committed to the promises we have made to our people,” the Prime Minister said.

“Our debt level is manageable, about 35 per cent of our GDP, our government had to make tough decisions, while making sure that Government itself is held responsible for those decisions," he said.

“That is an approach that is well accepted by our citizens.”

Prime Minister O’Neill said spending cuts have been done in a careful way that does that ensures the delivery of basic services.

“The delivery of these services to our communities is at the very heart of the policy agenda for our government and we were overwhelmingly elected in 2012 because of those commitments that we made to the nation," he said.

“Our key promises of free education, which is ensuring that all children in Papua New Guinea attend school and our commitment to free basic health care, particularly for our rural majority."

“Improving our law and order and reducing the impact of crime on families, and especially on women and children and building and restoring vital economic infrastructure such as roads, ports and airports, which is continuing to enable the growth of our economy," said O'Neill.

“So over the past four years we have delivered on those promises.”

The address to the National Press Club of Australia in Canberra, on March 3, was the second by Prime Minister O’Neill having last addressed the media group in 2013.