MARAPE: PNG’S ECONOMY MAKING A RECOVERY

Prime Minister James Marape of Papua New Guinea [Photo credit: Papua New Guinea Today]

Marape is re-elected as PNG Prime Minister

By Marcelle P. Villegas

James Marape has been re-elected as the Prime Minister of Papua New Guinea. Despite a general election that was scourged with moments of violence, death, destruction of infrastructure, and claims of election fraud, Marape is back in the office as the country’s leader.

In the current election, Marape’s Pangu Party earned at least 36 of 118 seats and is on the way to lead a coalition government that is composed of at least 17 different parties.

Another milestone for this election is that for the first time in several years, women candidates have been elected in Papua New Guinea’s parliament government. [1]

One of them is Rufina Peter who is an economist and member of the main opposition party called People’s National Congress. Peter will serve as governor for winning the Central Province electorate. She is one of the two women elected.

The election in some areas were almost declared as failed elections by the PNG police and electoral authorities due to some violent instances where a school and buildings were set on fire at the Enga Province. There were also attempts to remove ballot boxes in Hela Province. [1]

In a recent encounter with foreign media, the Australian Broadcasting Corporation, PM Marape disagreed with their comment that PNG’s lack of female representation in Parliament is a slow progress despite having Peter elected as Central Province Governor. [2]

The Prime Minister replied that Australia’s first female in the Australian Parliament only happened after 40 years. Australia’s federation started in 1901, but it was only in 1943 when there were females elected to Parliament. At that time,

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Marape: PNG’s economy making a recovery

By Paul Oeka

Prime Minister James Marape stated that the country’s economy is recovering. This was highlighted in a media statement issued on the 30th of August when launching the Midyear Economic and Fiscal Outlook (MYEFO) presented by treasurer Ian Lin-Stuckey, which highlighted that the Papua New Guinea economy is gradually recovering.

PM Marape’s projections indicated that by 2027 there would be a surplus in the budget, and during the year 2030 the country would have paid off its sovereign debt, giving way to PNG developing into a K20-billion economy.

“The story of our country is not as bad as many make it out to be,” said Marape.

In support of this, the current MYEFO numbers have shown an increase in the PNG economy by the largest Kina amount in history – from K82.6 billion in 2020 to K92.6 billion in 2021 and K110.3 billion in 2022.

Over the last two years there has been a K27.6 billion increase in the economy, which is more than the K12.4-billion increase in the economy when the PNG LNG Project started in 2014 and 2015.

Estimations from Treasury show there will be an average 6.2 per cent in inflation in 2022 after cost reductions by the removal of fuel taxes, reduction price of main food products and the reduction of school project fee subsidy.

Inflation rate will drop by 5.6 per cent in 2023 and continue to do so according to figures shown by the MYEFO.

The outlook forecasts an increase in revenue from K13.67 billion in 2021 to K17.07 billion in 2022, which is a 23.1 per cent increase on revenue outcomes in 2021.

Not only was the ambitious revenue target of K16.19 billion surpassed, but it was also exceeded by K875.8 million; and PNG’s debt to GDP ratio in 2022 will not fall from 53.3 per cent down to 49.1 per cent, which is even lower than the 51.6 per cent in 2021.

“At the macro level, the story of our country is not bad we have been progressing well so far,” PM Marape said.

“In 1975 our economy was a K5 billion economy, in 2011 it was K44 billion, in 2018 it was K79.6 billion.”

PM Marape commended Treasurer Ling-Stuckey for an outstanding job over the last three years.

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Dame Enid Lyons was elected to the House of Representatives, while Dorothy Tangney was elected to the Senate.

On the other hand, in Papua New Guinea, it only took three years for women to be a part of the Parliament. Aside from Rufina Peter, Kessy Sawang for the Rai Coast open seat in Madang has been elected to Parliament in the 2022 National elections.

From 2012 until 2017, Papua New Guinea also had three women who represented in Parliament. They were Julie Soso of the Eastern Highlands, Delilah Gore for Sohe Open and Loujaya Tony representing Lae Open.

Prime Minister James Marape was born on 24 April 1971 and has been serving as the Prime Minister of Papua New Guinea since May 2019. Since July 2007, he has been a member of the National Parliament of Papua New Guinea where he represented the electorate of Tari-Pori Open in Hela Province in the highlands.

In the past, he held cabinet positions as Minister of Education from 2008 until 2011 and as Minister of Finance from 2012 until 2019.

Marape was born in Tari, Hela Province. He studied in Minj Primary School and Kabiufa Adventist Secondary School in the PNG highlands. Marape earned his degree in Bachelor of Arts from the University of Papua New Guinea in 1993 and a postgraduate Honours Degree in Environmental Science in 2000.

Outside of his political career, he was Officer in Charge at the PNG Institute of Medical Research, Tari Branch from 1994 until 1995. For two years (1996 - 1998), Marape was the Operations Manager of GDC at the Hides Gas project. After earning his honours degree, he became the Acting Assistant Secretary of Policy with the Department of Personnel Management from 2001 until 2006.

Reference:

[1] (10 Aug. 2022). “James Marape returns as Papua New Guinea prime minister”. RNZ News website.

Retrieved from - https://www. rnz.co.nz/international/pacific-news/472591/james-marapereturns-as-papua-new-guineaprime-minister [2] (14 Aug. 2022). “PNG PM Marape slams Foreign Media”. Papua New Guinea Today.

Retrieved from - https://news. pngfacts.com/2022/08/png-pmmarape-slams-foreign-media.html

Photo credits:

https://news.pngfacts. com/2022/08/png-pm-marapeslams-foreign-media.html

PM addresses importance of gov’t and business partnership

By Paul Oeka

Prime Minister James Marape recently addressed the importance of the partnership the government and businesses can foster to discuss policy, financial barriers, technology, and innovation so that growth in business can be accelerated.

He highlighted this during the Business Council of PNG’s Back to Business Breakfast held on the 30th of August at the Stanley Hotel and attended by ministers of state, executives of the business council, and members of the private sector.

The Prime Minister’s address was followed by a panel discussion and a question-and-answer session with key economic ministers.

As this was the PM’s second business breakfast, Mr. Marape said: “Businesses are key drivers of the economy that I acknowledge, so conducive policy, and a regulatory business environment are key ingredients.”

“Last year when I addressed the business council, I stated that the government will be responsive to create a conducive environment for business, trade, and investment. The consultation of the private sector is significant in putting together policies so that interventions can be established to grow the private sector.”

Marape said that during the second year of his tenure as Prime Minister, the country was just recovering from the peak of the COVID-19 pandemic. At that time, his government was at the stage of placing critical actions to restore the economy, growing it as well as dealing with the aftermath of the pandemic.

Despite these challenges the economy showed stability, as the country adapted through well-managed investments from that period of great uncertainty to a period of more hope, Marape said.

The PM also took the time to show his gratitude and appreciation to the many investors and business houses who continued to operate and provide vital services and employment opportunities for the people during those trying times. The government has pledged to do its best and plans to build confidence in the business environment to support them in growing and sustaining their businesses.

Furthermore, Marape added that his Government remains fully focused on implementing Micro Small and Medium Enterprises (MSMEs) that will empower the people to become productive and self-sustaining.

The number of MSME’s has continued to expand and business and investors have a major role to assist this sector grow through provision of credit and business literacy skills, the PM noted. A thriving SME sector empowers the small business owners to be self-sustaining and contributes to economic development.

Marape continued by highlighting that to create and increase business opportunities, key ministers have been retained in their portfolios for continuity and stability while some portfolios have been merged to free up ministerial positions.

This has now allowed the government to create new ministries that best reflect its key priorities – for International Trade and investment, Oil Palm, Livestock, Coffee, and Agriculture.

“These ministries will ensure that more focus and attention is given to their mandate to strengthen their capabilities and production. This will allow these economic subsectors to grow and harness their potential for increased investment and revenue generation by business houses and the rural population,” he said.

The government is also focused on unlocking customary land for business and commercial purposes. That is why it is placing great emphasis on sustaining agriculture for over 82 percent of the population. The restructure of the ministries and separation of Livestock, Coffee and Oil Palm is important in making this a successful process, Marape said.

“We want to grow our economy and create more opportunities for our people. The road ahead requires a concerted and collective effort to fully realize our economic potential,” he said.

“We would like to return our country to a place where it is safe for our investors to do business and I encourage the private sector to work with the government to grow the economy through effective partnership arrangements,” Marape said.

The Prime Minister concluded his statement by saying: “To achieve this I am confident that the restructuring of my Cabinet and its refocus will derive the desired outcome that is beneficial to our socio-economic development aspirations in the next five years.”

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“Despite so many criticisms, he has ensured our short-term measures to keep MV PNG floating, in tough waters, are paying off,” he said of Ling-Stuckey.

“Over the last three years, we have climbed from a K79.6 billion economy of 2018, to an International Monetary Fund (IMF) forecast of K110 billion by the end of this year.”

“The thermometer, in as far as our economic expansion is concerned, is rising while similar countries as ours may have regressed.”

PM Marape stressed there was a lot more work in the short, medium, and long terms to be done by everyone in the country.

PM Marape said Porgera Mine, P’nyang LNG, Papua LNG, Pasca LNG, and Wafi-Golpu Mine should be progressed as a matter of urgency. “Short term measures include bringing back Porgera at the earliest,” he said.

“P’nyang LNG will run at the back of Papua LNG construction, so instead of just a four-year construction period like the PNG LNG from 2011-2013, P’nyang and Papua will be constructed over an eight-year period. That will mean a windfall economy as a result of construction from 2023 right up to possibly 2031.

“We will make a concerted effort to consult all landowners and all provincial governments in Gulf, Western and Enga provinces for these projects. The smaller Pasca Project, the easiest, lowest-hanging fruit, will be reactivated and that will hopefully by concluded at the very earliest.

“I am very keen to work with the Morobe Provincial Government, and Governor Hon. Luther Wenge, on the much talked about Wafi-Golpu Project.

“These five projects will be progressed over the next 10 years and give us the window for a K200 billion economy as I have been targeting.

PM Marape warned the country of the “lazy man expectations” that money from oil gas and mining would have a permanent solution to our economy.

“Far from it, and I liken that mindset to those on steroid drugs, needing boosts all time,” he said.

“The dependency on the boomand-bust of the petroleum and mineral sector must stop and the country must shift to the sustainable renewable sector of our economy.”

PM Marape said everyone should work hard over the short, medium, and long term.

“The hard work starts today,” he said. “Everyone must contribute to the growth of our country, and when you contribute, you receive services.

“We must start mobilising our people to get into agriculture, forestry, fisheries, and other small businesses. Our people own land and bringing markets to them will ensure all of them participate in the sustainable part of our economy.”

ABG rejects national government call for nationwide consultation

The Autonomous Bougainville Government has rejected Prime Minister James Marape’s statement calling for a nationwide consultation on Bougainville’s 2019 Referendum for Independence results.

The ABG’s response is to Prime Minister James Marape’s inaugural statement delivered in the National Parliament following his election as Prime Minister on August 9.

The Autonomous Bougainville Government maintains that ratification of the 2019 Bougainville Referendum on Independence will be done by the National Parliament to play and does not require the citizens of Papua New Guinea to be consulted on the matter.

ABG Attorney General and Minister for Bougainville Independence Mission Implementation Ezekiel Masatt delivered this statement in a press conference yesterday in Buka.

Minister Masatt clarified that there is no legal basis for the proposed nationwide consultation that the Prime Minister has alluded to. The provisions of the Organic Law on Peace Building and the 2001 Bougainville Peace Agreement required the people of Bougainville hold a constitutionally guaranteed referendum where in 2019, 97.7 percent of Bougainvilleans voted for independence.

“Per the requirements of the same laws, the ABG and the National Government are the only two parties that will consult on the overwhelming 97.7 percent outcome of the referendum, there is no mention of a nationwide consultation on the matter” Minister Masatt stated.

Minister Masatt further reminded the Prime Minister Marape that the 2001 Bougainville Peace Agreement was signed to end the Bougainville Civil War which was the bloodiest conflict in the pacific region since the World War II.

“The BPA was to promote peace by peaceful means and address the issue of Bougainville’s political future, with independence being a constitutionally guaranteed option,” Masatt said.

“The definition of independence was defined and agreed to by PNG, as a separate and independent nation from PNG. Independence was overwhelmingly voted for by 97.7 percent of Bougainvilleans.” Masatt said.

“That is the referendum result and by law, only the two governments can consult on independence being the referendum outcome however the national government has been using such terms as political status and political solution to an extent where they have misconceived the original definition,” Masatt said.

Masatt said it has become clear that the National Government lacks the institutional memory to fully understand the intentions of the 2001 Bougainville Peace Agreement and urged the national government to stick to the agreements reached by both Governments in the joint consultations.

The Joint Government Consultations on the Bougainville Referendum Result which started in May 2021, culminated in the Era Kone Covenant which was signed by the two governments in May this year.

The Era Kone Covenant is the document that provides for the pathway in which the referendum results will be brought into the National Parliament for final ratification. “It has been agreed that independence will be no earlier than 2025 and no later than 2027. Let me make it absolutely clear, that Bougainville will be independent,” Masatt stated.

Plans for PNG security pact with Australia, NZ revealed

Papua New Guinea’s new Foreign Minister Justin Tkatchenko has revealed his country is moving to negotiate a security treaty with Australia — and potentially New Zealand — in a move that could have far-reaching strategic implications for the region, ABC reported in August.

The fact it is being contemplated seems to signal that both Canberra and Port Moresby are willing to build a deeper defence relationship as China entrenches its power in the region.

Mr Tkatchenko told the ABC he discussed the idea with Foreign Minister Penny Wong during her visit to Port Moresby this week, and both countries were keen to press ahead with negotiations.

“And it will also make us connected in all aspects of anything that might arise now or into the future.”

Mr Tkatchenko said the treaty “would cover all security aspects in the region” and could well take in New Zealand as well – although he did not say whether he had had any discussions with the Kiwis on the subject.

“I would say New Zealand would be a major part of it as well, in our region. It would be a joint treaty to work on security,” he told the ABC.

“A treaty between our traditional partners in the region will just help give security to all countries.”

Mr Tkatchenko did not say whether the treaty could be binding, or whether it would be a broader informal agreement, stressing that discussions were at a very early stage.

“[This] has yet to be confirmed and finalised, it still has to go through the appropriate procedures and departments like Defence, like the Prime Ministers’ [department] and others to come to a complete understanding of that arrangement,” he said.

“It’s all not in black and white yet. But it was put on the table and it’s something that will be considered and taken forward into the future.”

He said both countries would have more detailed discussions about the proposal at the PNG-Australia Ministerial Forum due to be held in Canberra in November.

Mr Tkatchenko’s announcement comes as Australia pours more resources into its military ties with Papua New Guinea.

The federal government is already pressing ahead with a $175 million upgrade of the Lombrum Naval Base on PNG’s Manus Island with the United States.

Defence Minister Richard Marles said he wants to rapidly expand defence ties with Papua New Guinea, suggesting that the expanded Lombrum base would be a key asset for military forces in both countries.

In addition, Australia recently signed an agreement to help rebuild the Papua New Guinea Defence Force air wing.

The ABC asked Senator Wong about the proposed treaty during an interview on Tuesday afternoon in Port Moresby.

She played down the prospect of any security treaty being struck soon, saying she had only had “very, very early discussions” with Mr Tkatchenko and didn’t want to get “ahead” of talks with the newly elected government under James Marape.

“We obviously … discussed some of the items contemplated under [our partnership], which include discussions about security, but we have a long way to go. It’s a new government, and we want a list of what Papua New Guinea’s priorities are,” she told the ABC.

She also would not be drawn on whether New Zealand might also be invited to join, or what shape the treaty might take.

“Those are matters that will be discussed by Australia and Papua New Guinea. But you wouldn’t be surprised at both countries wanting to continue to work together on security cooperation, we have a long standing defence relationship,” she said.

In a statement, New Zealand’s Ministry of Foreign Affairs and Trade said it “has not been approached by the government of Papua New Guinea with regard to a formal security arrangement.”

“Aotearoa New Zealand and Papua New Guinea are close partners with a long record of close cooperation across a range of sectors.

“We look forward to engaging with the new government in Papua New Guinea and identifying areas for cooperation,” a ministry spokesperson said.

“We are committed to working with our partners in the region to support our collective security objectives.”

Still, Dr Anna Powles from Massy University said Mr Tkatchenko’s declaration about the treaty was “a surprising development”, particularly given Papua New Guinea’s new government had only just taken shape after national elections.

She suggested the move might have been triggered by increasing anxiety in Port Moresby about the implications of the security agreement that China struck with Solomon Islands, saying it “likely reflects Prime Minister Marape’s concerns about the Solomon Islands-China security deal on his doorstep”.

“Australia has sought to establish a hubs and spokes system of bilateral security treaties in the Pacific, and a security treaty of this nature with PNG would be an obvious extension of that,” she told the ABC.

But the prospect of Australia, New Zealand and PNG all signing a new military agreement is likely to have strategic reverberations across the region.

Dr Powles said while a few Pacific countries already had strong defence ties with Australia, many would still monitor negotiations between Canberra and Port Moresby very carefully.

“It is timely that Pacific countries consider what their red line is on security, however, it is unclear what this proposed treaty entails or how it fits into both the existing architecture, or the review of the regional architecture called for in the 2050 Strategy for the Blue Pacific,” she said.

China is also likely to be hostile to the proposed treaty, although Mr Tkatchenko brushed off suggestions that a new defence agreement might stir anger in Beijing, or in PNG’s neighbour Solomon Islands.

“That’s our sovereign right to work with treaties with anybody that we feel is appropriate and we feel is right and for the good of the country,” he told the ABC.

Foreign Minister Hon. Justin Tkatchenko

Government debt sits at K48.1b, says Popotai

By the end of December 2021, the total public (government) debt still due was K48.1 billion, or 51.6% of the nation’s GDP (gross domestic product).

The present outstanding debt is made up of K25.2 billion from local sources and K22.9 billion from external sources, according to the acting governor of the Bank of PNG Benny Popoitai.

Total government deposits at depository firms rose by K1.3 billion to K5.2 billion, according to Mr. Popoitai, mostly during November and December of 2021.

“This increase reflected drawdowns of external budget support as well as financing from domestic sources,” he said.

According to him, the total domestic credit provided by financial institutions to the public sector, non-profit organisations, and “province and local level governments (P & LLGs)” declined by 0.2% to K17.7 billion from the previous quarter’s gain of 0.9%.

Mr. Popotai said loans to the public and private non-financial firms fell by K205.1 million and K53.5 million, respectively, to K15.6 billion and K1.8 billion.

“The increase in lending to the ‘P & LLGs’ of K224.5 million reflects a reclassification of a loan during the quarter,” he said.

According to Mr. Popoitai, the National Government’s budgetary operations in 2021 indicated a deficit of K6.2 billion, down from K6.6 billion in the same time of 2020.

This amounts to 6.7% of the nominal GDP.

According to him, overall revenue and grants in 2021 were K13.8 billion, a 14.6% increase over 2020 and 101.4% of the 2021 Supplemental Budget amount.

“The outcome reflected higher than projected grants from development partners and tax revenue collections, which more than offset lower collections in Other Revenues (Dividends, Statutory Transfers, and Fees & Charges).

Total expenditure in 2021 was K20.1bn, 3.8 per cent higher than the 2020 outcome, and 0.8 per cent lower than the Supplementary Budget appropriation,” he said.

“As a result of these developments in revenue and expenditure, the budget deficit was K6.2 billion which was financed from domestic and external sources totaling K2.6 billion and K3.6 billion, respectively.”

SHIPPING INDUSTRY REVIEW POSTPONED TO 2023

The Independent Consumer and Competition Commission has postponed the review of the coastal shipping industry until 2023.

In a statement, ICCC Commissioner Paulus Ain said the review, which was started earlier this year to address issues with the market structure and efficiency of the coastal shipping industry, has been postponed until next year after several problems were found in the submissions the watchdog received.

He said that on April 25, 2022, a discussion paper was published to get feedback or opinions from all stakeholders.

According to Mr. Ain, the ICCC has received several submissions that highlight important industry challenges that also apply to PNG’s domestic maritime sector.

“The purpose of this review is to understand the current market dynamics and development that have taken place since the last review by the ICCC in 2006.

“Since then, market dynamics within the shipping industry have changed, in terms of market efficiency, structure, legislative and regulatory requirements, policy directives, processes and procedures of operations in the coastal shipping industry.

“Ultimately, the goal is to identify opportunities to promote and improve market competition conditions,” Mr Ain said.

“Some of the concerns raised relate to matters such as institutional bench-mark practices, cabotage, labour-supply needs, subsidies and oversight of freights, infrastructure demand, competition and costs.”

According to Mr. Ain, the review included, among other things, the lowest economic market price possible prices, Quality shipping services provided, promote incentives available to shipping service providers to innovate practises and products and increase or promote opportunities for shipping service providers to maximise their profits.

“The ICCC thanks those stakeholders that have provided their written submissions on the Discussion Paper and further advise that consultations on these concerns will not continue until the review commences in early 2023.”

ICCC Commissioner Paulus Ain

Connect PNG: The Road to Development?

By Alyssa Leng

Inadequate funding has meant roads are few, far between and in poor condition across Papua New Guinea. Port Moresby is not connected by road to either the industrial hub of Lae or the agricultural and population centre of the Highlands region, even though all three locations are on the same landmass. With 17% of PNG’s population having no access to roads at all – as noted in this year’s budget documents (Volume 1, page 13) – many people lack access to markets and services, including health and education, posing a serious impediment to development.

The Connect PNG Economic Road Transport Development Program (Connect PNG), announced in 2020, aims to address these issues. More than 16,000 km of road will be worked on over several phases under the 20-year program, at an estimated cost of K20 billion. Phase 1 aims to finish the Trans-Island Highway and consequently link Port Moresby and Lae, followed by Goroka, Madang, Mount Hagen, and Mendi. It includes several road projects that began under the previous government. Phase 2 primarily seeks to link isolated provinces to the rest of the country, and Phase 3 focuses on completing north–south access along the border with Indonesia.

Connect PNG is a step in the right direction for PNG’s development, in that it pledges greater and more consistent funding for road construction and maintenance. But the program faces clear limits from the outset, with significantly less funding to be provided by the government than legislated.

There is no doubt that Connect PNG is aiming high. The PNG government has committed a significant 5.6% of the annual national budget towards the program, as outlined in section 3(1) of the Connect PNG (Implementation and Funding Arrangements) Act 2021. Using forward projections for budget expenditure, this commitment would amount to over K1.1 billion in 2022 prices each year until 2027.

It is difficult to compare this level of spending to how much the PNG government has spent on roads historically, due to lack of data. But in 2022, the legislated budget allocation for Connect PNG comes close to both the budget allocation for the entire law and justice sector, as well as the 6.4% of this year’s budget given to the education sector (Volume 1, Table 19).

Should Connect PNG’s plans come to fruition, roads would receive a far more consistent flow of funds than has occurred previously. This is particularly promising for road maintenance, given its relatively low visibility and high economic returns relative to road construction.

Yet it seems unlikely that this ambition will be fully realised, even in the immediate future. Instead of the K1.24 billion implied by the 5.6% rate, budget documents suggest that the government has put aside just K522 million for Connect PNG in 2022 (Volume 1, page 83). The same documents also refer to a minimum of K500 million annual budget support (Volume 1, page 13) instead of the legislated 5.6% of the total budget.

Further over the horizon, Public Investment Program forward estimates suggest that spending on Connect PNG and related projects by the Department of Works & Implementation will not surpass K625 million in nominal terms annually between 2022 and 2026 (Volume 3A, pages 566-672). Importantly, this reduction in funding relative to the legislated amount comes be-

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