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Business |
Effective use of minerals wealth can
boost economy
EFFECTIVE use of the PNG’s minerals
wealth can enable its economy to grow twice as fast and
“significantly reduce poverty and unemployment”, according to the
International Monetary Fund.
Following annual consultations with the Government, the IMF said
PNG could grow by 7-8% annually.
This will require “more effective use of PNG’s mineral wealth,
including a sustainable medium term fiscal policy that efficiently
delivers needed development expenditure and decisive efforts on
structural reform to encourage greater activity in the non-mineral
sector”.
IMF directors commended the government on “sound and supportive
macroeconomic policies.
“Along with favourable commodity export prices, these have led to
a sustained economic recovery, macroeconomic stability,
a strong external posi-
tion and a declining debt-to-GDP ratio in recent years,” they
said.
But the IMF warned that significant challenges remained, including
a need to reduce poverty and unemployment and a vulnerability to
external economic shocks.
They welcomed a shift in government spending from recurrent
expenditure to development, particularly infrastructure and human
capital, in the 2006 supplementary budgets and the 2007 budget.
But expressed concern at the size of spending increases and the
risk that funds will not be properly utilised, even though they
were “encouraged” by the Government commitment to maintain fiscal
prudence in the run-up to the elections.
The IMF directors urged the Government to subject all major
spending agencies to follow basic accounting procedures, to press
ahead with closure of unneeded trust accounts and to resume its
“right-sizing” initiative to streamline Government spending.
 
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