Index ranks economy 128th freest

Business, Normal

The National,Tuesday17 January 2012

PAPUA New Guinea’s economic freedom score is 53.8, making its economy the 128th freest in the 2012 Index of Economic Freedom, a publication by the US Wall Street Journal.
Its score is 1.2 points better than last year, primarily because of a significant improvement in the control of government spending.
This meant that PNG ranked 26th out of 41 countries in the Asia–Pacific region, and its overall score was lower than the world and regional averages.
The Index is an annual guide published by the Wall Street Journal and The Heritage Foundation, Washington’s No. 1 think tank, covering 10 freedoms from property rights to entrepreneurship – in 184 countries since 1995.
The Index also found that PNG was seemingly mired in the “mostly unfree” category.
It noted that the economy remained divided between a formal sector based on exports of natural resources such as the mining of rich deposits of gold, copper, oil, and natural gas, and a large informal sector that relied on subsistence farming and other small-scale economic activity.
The fragility of prospects for long-term economic development was reflected in the very low score for property rights and a level of corruption that undermines the rule of law.
It stated that much-needed private-sector development was being held back by regulatory deficiencies and the lack of institutionalisation of open-market policies.
The effectiveness of government remained low, although the management of public finance had improved notably in recent years.
Over the past decade, public debt had dropped from about 70% of gross domestic product to below 30% of GDP.
The Index also noted that the overall regulatory framework for PNG remained poor, despite some reform efforts.
Its progress toward the structural changes needing to promote entrepreneurial activity had been limited, the Index said.