Pacific nations hit hard by coronavirus pandemic: Economist


MUCH of the Pacific Island countries were hard hit by the pandemic, especially economies heavily dependent on tourism such as Fiji and Vanuatu, an economist says.
Institute of National Affairs executive director Paul Barker said PNG had taken a hard hit with a severe drop in the prices of major commodities such as oil, gas and copper, plus the closure of the Porgera mine (at a time of high gold prices).
He said it was also because the Government had been “in a severe budgetary squeeze even before Covid-19 hit, after years of major budget deficits, relatively weak expenditure control and a growing level of debt and debt servicing costs”.
Barker was responding to Australia media reports regarding the recent budget allocation for Pacific Island countries including PNG.
An ABC report last week said: “The federal government has effectively increased Australia’s foreign aid programme with a one-off supplementary funding package to help Pacific countries recover from the Covid-19 pandemic.
“Papua New Guinea remains the largest recipient of Australian aid with AU$596 million (K1,495mil).
“In the Pacific, the Solomon Islands is next with AU$157 million (K393.85mil).”
Barker said there was some logic in what the Australian government was doing.
“The global pandemic has impacted the global community in direct and indirect ways, with the direct health effects and the economic results from fall in demand, lower commodity prices and government imposed restrictions on travel and trade.
“Governments and international institutions around the world have to be innovative to respond to an almost global economic crisis, with some countries having been much harder hit than others, to date.
“Australia has long had aspirations as a player on the global stage, particularly since the days of foreign minister (Gareth) Evans.
“With AusAID, they provided some valuable contributions cross the developing world.
“But as their aid became more strategic and absorbed into foreign policy objectives, and as more international interest started focussing on the Pacific, invariably Australia, as only a medium level economic power, recognised its limitations and need to focus, unless it was going to increase overall development assistance, (which would also have both a humanitarian and strategic value).
“Considering the current Australian government didn’t gain office on the back of enlarging the overall aid programme, clearly it was logical to focus its efforts.
“PNG and some of its neighbouring economies are badly hurting.
“In PNG and the Pacific, Australian assistance can make an essential difference while safeguarding its own doorstep, in a way, or extent, that it really cannot achieve in other parts of the world, even though some of them may be really desperate, with years of conflict and need for humanitarian assistance.
“It’s what the funding is earmarked for, and how those Pacific Island nations utilise and account for the support (both to their own citizens and the donor) that really matters, whether it will have a lasting impact or be just some stop gap intervention.
“PNG citizens will judge the assistance on its utility, how it engages and impacts on the ground and withstands the test of time, rather than on monuments to prevailing leaders, that fail to address the underlying concerns.”


  • Australia is continuing to assist even if it has its own problems. For how long can we continue to “play children” and become grown-ups for one? Who’s going to lead us to that level?

  • My view on this:

    Australia funding assistance is ongoing and have played a major role in developing the pacific island countries. However, the assistance is all strategic because this part of the world is untapped for trade and commerce activities, which Australia knew about it. As a close neighbor and a developed nation, it is what I describe as its social corporate responsibility because the main investor partners (companies) are Australian owned, operating in these areas.
    The timing for more fund injection is right due to threat of other countries entry into this region as Australia has already established its position. There is a potential of trading shift to pacific region as the hub. The aftermath of geopolitical tension between powerful economies between China and US and covid-19 pandemic might trigger this shift. China an emerging economic power in the eastern part of the world is under stressed because it has been accused of the current crises of covid-19 and also accused of cheating on tax levies and are now been heavily assaulted with export tax penalty of its products to US market and China retaliated the same on US products. US and China are world leading economies and the major trading partners and are now in battle. The tension between these two nations resulted in each country demarcating conservative policy, resulting in drying up the traditional markets or gardens they have been feeding on over the years. The cascading effect is streaming down to other countries. In the East, China is the major manufacturer of technology. China is now looking to other partners to do business with and the likely partnering countries are the ones that benefited from the Belt and Road Initiative, which PNG is one of them. These70 developing countries or emerging economies that benefited from Belt and Road Initiative will provide support to China, which is also China’s strategy. The most debted countries owning to China will have no options. The other two countries are; India, a leader in the electronics manufacturing and Indonesia, now leading in consumer goods. These major economic countries in the east are shifting to inward turn in their economic policy, by refocusing on customers in their region. They are now targeting partners in the region proximity mainly in the South East Asia, Pacific, Africa etc. This inward policy will put Australia in a position to take advantage of what is going to happen inwardly in the region. Australia is a developed nation and is the major investor in the South Pacific region as well as other countries in the eastern part of the world.
    Australia will continue to feed PNG with bigger slice of the cake because PNG is suited in the potential economic zone between the emerging markets/suppliers of Asia and other countries in the region, which PNG is the gateway when this happens. PNG is the ideal strategic location because of big geographic island country. Big ports, airports, are currently built in this region as a strategy to accommodate these activities in the future. It is my opinion that PNG will be the haven for the next world economic trading zones taking advantage of this and Australia will get back is share of cake it invested. The strategic intent of Australia will soon be accomplished and I believe Australia will grow its economy using this platform and one day will equal up with other countries like US and China.

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