The National, Wednesday 23rd November 2011
THE World Bank has warned of increases in crime rates if there is continued failure in addressing the inequality in distribution of the nation’s economic wealth.
“Progress against the modified Millennium Development Goals adopted by the PNG government is generally off track.
“Crime rates may well rise further, exacerbating a major operational cost for businesses, if there is continued failure to address mounting inequality, limited opportunities for low-skilled workers, and poor provision of security and other public services,” the bank said about PNG in its economic update titled: Navigating Turbulance, Sustaining Growth. It was released in Singapore yesterday.
It said the O’Neill government had formulated “ambitious plans to tackle these issues.”
“Now, before revenues from new natural resource projects start to flow, is the time to develop the systems and lay the groundwork for the improvements in governance needed to achieve those goals,” it said.
It wanted that although PNG was headed for its eighth consecutive year of growth with GDP likely to hit 10%, there were risks that the government should be aware of.
High inflation is the obvious one. There is still continuing uncertainty on the global financial front which could reverse the high commodity prices that PNG enjoys today.
If this happens, resource projects could be put on the back burner.
“Concerns are growing around both external and domestic developments. The deteriorating and more uncertain global outlook creates risks that the prices of PNG’s exports may retreat significantly from recent levels.
“A reversal in commodity prices may reduce the likelihood of potential future resource projects reaching final approval,” the bank warned.
“PNG’s economic outlook remains strong, though not without risks. The central driver is the stream of new investments in the country’s productive capacity.
“Residential property constraints in the main urban areas, and the associated very high rental rates, are also being addressed with a large increase in the supply of new housing units and hotel rooms expected to enter the market from Q4 2011 and through 2012.
“Efforts are also being made to improve the efficiency with which business and government operate, although PNG’s ranking in the 2012 Doing Business survey declined by four positions to 101 out of 183 economies as other countries reform efforts moved ahead of PNG’s.
“The government is also investing in measures to strength its public financial management systems, but the current management of the various financial accounts has not helped remove excess liquidity from the financial system,” the bank said.
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