Economy. Papua New Guinea press review
Prime Minister of Papua New Guinea (PNG) Hon. James Marape gave a report of his government’s performance over the last 12 months in office. According to Mr. Marape, his government lifted the Gross Domestic Product (GDP) growth rate from a recession minus 0.8% in 2018 to 5% in 2019 (increase of 5,8%). Prime Minister claims that his government is using good budget approach to lift our economic recession however COVID-19 has held back their efforts. Importantly, that PM says that the government has also ensured that the share of the national budget increased from K4,715 billion (US$1,365 billion) in 2019 to K6,281 billion (US$1,818 billion) in 2020. Such foreign exchange reserves are equivalent to 9.3 months of non-mining imports and 5.4 months of total imports. Prime Minister Marape also the government has sought in the first12 months to repair the budget process, driver agricultural growth, generate job creation, provide MSMEs to grow, drive reforms in State Own Enterprises to increase contributions to the GDP growth, and private sector expansion and grow exports.
However, Hon. James Marape announced that the country would be in a position to know the status of the four mining, oil and gas projects before the 16th of September 2020. According to Mr. Marape, discussions on the P’nyang gas project were in «a very advanced stage». Hon. James Marape also marked that Government was also in the process of advancing talks on the Pasca, Wafi Golpu and Porgera projects: «I’ll be releasing a letter to our partners in the P’nyang project stating our position as Government […] we have already established that Pasca gas and oil fields outside Gulf will be advanced and we are working on advancing the Wafi Golpu project […] the case is before the court as far as Porgera is concerned,» Mr. Marape stated.
Prime Minister Hon. James Marape has dismissed reports that PNG is desperately seeking a US$2 billion bailout package from international financial institutions: «We are not that desperate yet,» marked Mr. Marape. The Australian Financial Review reported that Australia and international lenders were preparing a bailout package of about $US2 billion for PNG to help prevent it from becoming one of the failed States feared as a result of the coronavirus pandemic. It reported that as oil and commodity prices tumble, PNG was facing a severe budget shortfall and was negotiating a bailout package with the International Monetary Fund, World Bank and bilateral donors like Australia. In addition, the AFR reported that. Mr Marape spoke with Scott Morrison on Tuesday. According to David Gould, a regional economist from the World Bank, said PNG would require a concessional loans package to help it through the coronavirus crisis: «the Pacific, and countries like Papua New Guinea, are among the most vulnerable in the world […] as donors we are looking at ways to support PNG,» he said.
At the same time, in PNG Finance Minister and Pangu Pati member Rainbo Paita, despite the effect of the COVID-19 on the global economy and trade, Papua New Guinea had done well comparatively: «Trade has come to a major halt, but the country’s economy is resilient and the Government is doing its best to ensure the economy stays resilient,» Mr. Paita said. According to PNG Finance Minister, the Government had recently been looking for more cash «simply because a lot of the programmes for the COVID-19 was not budgeted for […] so we had to make some (adjustments) during these trying times. Moreover, Mr. Paita slammed the overseas and local media «for misreporting that the Government was nationalising projects in the country».
According to Bank of PNG (BPNG) governor Loi Banaki, the current supply of foreign exchange in Papua New Guinea is not as bad as what has been claimed by some businesses and companies in the country. Mr. Banaki said that commencement of some of the major resource projects in the country would help in the foreign exchange supply.
«The situation is still the same […] there are two things […] One is that the providers of foreign exchange like, Porgera is out now, it is not exporting […] This will affect the inflows of foreign exchange and dollars coming in […] With the price now down for oil and gas, it might affect the revenue coming in but the demand for foreign exchange or dollars going out is still high […] For March, we’ve seen some decline because some companies actually slowed down operation and demand also slowed down […] It might change when we get back to normal […] When they (resource projects) go into their construction phase, we will see a lot of dollars coming in,» BPNG governor said.
Bank of Papua New Guinea has conducted a country wide survey on small to medium enterprises affected by COVID-19. About 700 Small and Medium Enterprises (SME) participated in the study. The results of the study are expected in July. However, PNG Government is releasing K44.5 million (US$12,8 million) from its coronavirus Economic Stimulus Package to support micro, small and medium enterprises (MSMEs). The money has already begun to flow to district COVID-19 accounts. «The informal sector and MSMEs are the backbone of the rural economy and provide livelihoods for over 80% of the population. By supporting MSMEs, we support the rural and subsistence economy throughout the nation, which has been hard hit by the State of Emergency lockdown».
Minister for Treasury Ian Ling-Stuckey stated that workers will continue to pay taxes to help keep the country afloat with the National Government having no plans to give tax relief during this COVID-19 shut-down period: At this point in time as we know of national government revenue of K14.3 billion (US$40,4 billion), K11 billion (US$31,7 billion) of that is collected by the IRC (Internal Revenue Commission) and that comprises a little under 80% total of our national budget […] To cut income taxes is something that is going to affect our revenue position and something that we will look at very closely and reduced as a very last resort,» marked Mr. Ling-Stuckey. According Minister for Treasury PNG Government «working on is to look at other avenues to assist struggling businesses» and tax holidays.
Air Niugini Chief Executive Bruce Alabaster says it will further expand domestic flights from next week in response to slowly recovering demand following the state of emergency lockdown.
The improvements include:
• Restoration of a fortnightly direct service to Buka on Fridays;
• Increase of Lae flights to 28 weekly;
• Increase of Manus flights from four to six weekly – two extra flights via Madang are added to the existing two via Lae and two via Hoskins;
• Additional three direct flights to Hoskins on Tuesday, Thursday, and Saturday;
• Services to Wewak restored to daily, including nonstop services from Port Moresby as well as some via Lae and Madang;
• Services to Vanimo increased from three to five weekly;
• Goroka jet services increased from seven to 11 weekly, with the resumption of afternoon flights on Monday, Thursday, Friday, and Sunday to complement the existing daily morning flight;
• Daru services increased from three to four weekly.
The tourism industry will welcome Air Niugini’s proposal to acquire 60% interest in PNG Air, says Melanesian Tourist Services Ltd (MTS) Managing Director Sir Peter Barter. According to Mr. Barter, sharing facilities and working together should result in lower operational costs for both airlines. «PNG remains one of the greatest potential tourist destinations in the Pacific region […] The concept outlined by Air Niugini and PNG Air should be well received by the international travel industry and improve the chances of PNG coming out of the lockdown with a better chance to restore tourism […] The MTS, as a company, has already reduced tariffs by 50 per cent at the Madang Resort and I am confident other hotels and tour operators will do likewise in an attempt to reduce the cost of travel,» said Sir Peter Barter and also marked that the travel industry was among those worst hit by the COVID-19.
Papua New Guinea will continue to have its observers on its domestic fishing and carrier vessels while following strict health measures, according to the PNG Fishing Industry Association Inc.President Sylvester Pokajam said this in light of recent actions by the Western and Central Pacific Fisheries Commission to suspend or waive 100% observer coverage on all purse seine vessels fishing and transshipping in Parties to the Nauru Agreement (PNA) waters as a result of the coronavirus pandemic. Pacific fisheries officials last month extended the suspension of 100% observer coverage requirements on all purse-seiners fishing in the waters of member-nations to 31st of July 2020.
Works and Implementation Minister Michael Nali says his ministry will be putting out first five expressions of interest for Connect PNG major highways. Mr. Nali also marked that provinces and districts would not be receiving funds to build roads but could help his ministry select contractors. In response to a question from the Western Province Governor Toboi Awi Yoto about financing the construction of a road for the Daru-Oriomo-Morehead road in South Fly (Western province), Mr. Nali noted that the Daru-Oriomo-Morehead road was being considered in the Government’s Connect PNG policy and funding was available. «The Department of Works and Implementation is now gathering data to identify the number of contractors that are in all provinces and districts […] Once funding is released, provincial governments, districts and my department will sit together and put these projects on tender and identify contractors that have the capacity to build these roads,» Mr. Nali said. The Minister said other important roads like the Highlands Highway, are funded through the K3 billion (US$866 million) Chinese Exim Bank loan and the Baiyer-Madang road funded through the Indian Exim Bank loan.