Call to reshift focus

 THE major new resource projects in Papua New Guinea encourage the “resource curse” and an attitude of “carefree spending” on activities which are often poorly planned and accounted for, a prominent economist says.

Institute of National Affairs executive director Paul Barker said PNG, as a well-resourced lower-medium income country, with a backlog of investment, needed human resource and some physical infrastructure – notably basic access. 

He said PNG cannot afford to misallocate on status of overpriced projects, but needed to focus on core infrastructure and services (including maintenance) to meet the real needs of its population. 

He was commenting on critics who noted that the country was heading towards economic crisis.   

“The weak accountability mechanisms (including Parliament process) allow Government to get away with poor governance,” Barker said told The National.

“The situation for PNG is not really like Greece in that Papua New Guinea should be readily able to address the problem by better focusing expenditure on core government 

functions and restraining the levels of waste (difficult overnight) – including overpriced contracts often on projects with low utility or investing in commercial activities better left to the private sector, but entailing costly overseas loans.” According to Treasury Department Mid-Year Economic and Fiscal Outlook: “The mining and quarrying sector was anticipated to rebound in 2015 and grow at 10.8 per cent after a disappointing performance of negative 1.9 per cent in 2014. 

“The rebound is due to an anticipated return to normal production in a number of mines.”

On the other hand, low commodity prices pose a mammoth challenge for the mines in maintaining their margins at the back of rising input costs and the weaker kina exchange rate. 

However, it is understood that most mines are adjusting to the current developments and are undertaking cost cutting measures.