ADB head singles out PoM for first visit

Business, Normal

The National, Friday July 5th, 2013

 WHEN the new president of the Asian Development Bank casts his eye over 45 client countries from Mongolia to Afghanistan for his first site visit, he turned to an unlikely corner of the vast patch – Port Moresby.

Despite being able to choose from some of the world’s case studies in economic success and some of its poorest, most populous nations, Takehiko Nakao felt Papua New Guinea faced classic development issues and needed to be acknowledged as trying to grapple with them.

“I chose PNG because the Pacific poses many challenges as well as opportunities for us,” he said last week in Sydney, in one of his first interviews since taking over the job.

The PNG challenge and opportunity are no better illustrated than by a government graph, which shows economic growth quadrupling to 20% a year by 2015, then sliding back to the 4% levels being seen this year.

That’s the result of the start of the US$19 billion ExxonMobil export gas project, which will pump money into the government but also put the economy through the sort of grating gear shifts that travellers on the country’s highways are familiar with.

Nakao, formerly Japan’s top international economic official, has strongly supported the development strategies being pursued by Prime Minister Peter O’Neill’s young government, including financial devolution, soft and hard infrastructure spending and a sovereign wealth fund.

But for a multilateral official on a first visit, he also had some quite tough messages for a country just starting to reap the benefits of recent resources investment, declaring in a speech: “PNG must become more than simply an exporter of primary resources.”

Nakao noted that a dual economy with capital intensive mining and subsistence agriculture “could severely weaken the overall productive capacity of the entire economy. 

“It can also affect society in general by creating disharmony and a sense of deprivation.”