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PNG not on the brink: new report.



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MEDIA RELEASE MINISTER FOR FOREIGN AFFAIRS ALEXANDER DOWNER FA159 1 December 2004

PNG NOT ON THE BRINK: NEW REPORT

Papua New Guinea’s economic outlook looks brighter thanks to recent budget management improvements, current high prices for commodities and positive developments in its resources sector.

A new report I am launching today, Papua New Guinea: The Road Ahead, shows that although the outlook is brighter Papua New Guinea still faces many challenges.

The report by my Department’s Economic Analytical Unit acknowledges the significant policy reforms that Papua New Guinea has introduced over the past decade. It also welcomes the recent restoration of macroeconomic stability and the benefits of high commodity prices. However, it assesses that these positive outcomes will not be sufficient to support a rise in per capita income.

It finds that even if new developments, such as the proposed PNG-Australia gas pipeline and Ramu nickel and cobalt mine proceed, Papua New Guinea will face difficult years ahead. The momentum of reform, especially a reduction in the public sector wages and salaries bill, must be maintained and development expenditure increased for growth to continue.

PNG is also facing the threat of an HIV/AIDS epidemic that will further threaten the country’s overstretched health infrastructure and public finances.

Agricultural productivity must also be increased to ensure the population’s welfare and the private sector strengthened to create income and employment opportunities. And roads and utility services must be improved to attract foreign investment. To achieve these outcomes and sustain economic growth, law and order and issues of governance have to be seriously addressed.

PNG faces major challenges but it is not “on the brink”, as some have suggested. And it is not facing these challenges alone. Australia has demonstrated a strong and continuing commitment to our nearest neighbour.

Through the existing $300 million annual bilateral aid program and the new funding of $805 million over four years under the Enhanced Cooperation Program, Australia will continue to provide resources and expertise to strengthen economic management and improve the law and order situation.

The report can be purchased through the DFAT website (www.dfat.gov.au/eau) or through Jane Monico (phone 02 6261 3114 or email jane.monico@dfat.gov.au)

Note: The Minister will launch Papua New Guinea: The Road Ahead at the Theatre, Parliament House, Canberra, ACT today at 10.30am

Media inquiries: Chris Kenny (Ministerial) 02 6277 7500/0419 206 890 Julie McDonald (Departmental) 02 6261 1555.

Media releases and speeches are available from DFAT via the internet. http://www.dfat.gov.au/