Sir Mekere credited for economic boom

GOVERNOR of the Bank of PNG Wilson Kamit has credited the stability and improvement to the economy to the reforms introduced in mid-1999 by the government of Sir Mekere Morauta.
Addressing the 5th Annual Report Meeting of the PNG Sustainable Development Program Ltd, Mr Kamit described the period 1989 to 1999 as the “lost decade” characterised by gross mismanagement of the economy, which resulted in an almost default on PNG’s foreign currency liabilities in 1994.
This forced the Government to float the kina.
The Sandline affair in 1997, the severe drought of 1998 and 1999, the Asian financial crisis, the world economic slowdown, and continued mismanagement of the economy were other highlights of this lost decade, Mr Kamit said.
He said PNG was fortunate that in mid-1999, a new government was formed that undertook some major reforms.
He said it took four years to stabilise the economy, re-establish the confidence of the public, herald a period of political stability, which had seen for the first time, a government last the full five-year term through the Integrity of Political Parties and Candidates Law.
He said these, together with high commodity prices, had resulted in a very stable macro-economic environment of fiscal surpluses, low inflation and interest rates, an appreciating exchange rate and fast accumulation of foreign reserves, which were now at US$1.5 billion (K4.7 billion) compared to US$300 million (K940 million) three years ago.
He said PNG’s inflation and interest rates were lower than in Australia.
But he pointed out that a growth rate of 4% was very low for a low income developing country.
He said to ensure the majority of the population benefited from the mineral boom, PNG had to generate a growth rate of 6% or 7%.

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