ANZ: SWF is biggest challenge for PNG

By MALUM NALU
THE biggest challenge facing the Papua New Guinea government now is management of the sovereign wealth fund (SWF), according to ANZ chief economist for Asia-Pacific Paul Gruenwald.
However he told reporters, after speaking at yesterday’s ANZ Annual Economic Breakfast at the Royal Papua Yacht Club in Port Moresby, that the PNG government did “not have to reinvent the wheel” with a completely new SWF system.
ANZ head of institutional banking PNG and North West Pacific Mark Dawson said PNG did not have to look afar for a good example when the PNG Sustainable Development Program (PNGSDP) was already in place.
“I think the big thing is getting the sovereign wealth fund correct by investing in the country’s infrastructure, and the country’s human capital, education and health systems,” Gruenwald said.
“One of the things I showed in my presentation was PNG’s per capita income is below the average of the Pacific.
“One of the objectives of using the sovereign wealth fund effectively is to invest in a way that’s going to benefit the physical and the human infrastructure of PNG.
“That’s the big challenge.
“It’s a multi-year challenge and I think that’s the big one.”
Gruenwald, however, added that the PNG government did not have to bring in a completely-new SWF when there were already very-successful models to follow.
“The government shouldn’t reinvent the wheel,” he said.
“There are good models for sovereign wealth fund.
“The usual one is called the Santiago Principle.
“It’s based on Chile, which is a big copper exporter.
“They had a big windfall.
“They had a development agenda, a list of expenditure items, and anything on the list can be funded through the sovereign wealth fund.
“Botswana did something very similar with diamonds and Norway did something very similar with their oil, so there are global standards which PNG should try to follow.
“The government should know about this.
“They’ve been talking with the World Bank and the IM F.”
Dawson said PNGSDP provided an example of good governance with focus on development in the right areas.
“So, absolutely, that’s (PNGSDP) an example that demonstrates that it (SWF) can work,” he said.
“In their instance, actually, majority of funds are retained offshore, not onshore.
“I think it’s actually a good example.”