The National – Friday, December 31, 2010
THE year, which ends today, has seen quite a number of record performances.
The government handed down a record 2011 budget of K9.3 billion, half of which comprises the development budget – another record.
It has seen the unprecedented dethroning of a governor-general by the Supreme Court on grounds that parliament broke provisions of the constitution in appointing him.
Prime Minister Sir Michael Somare appointed Wabag MP Sam Abal to the position of deputy prime minister, replacing incumbent Kandep MP Don Polye.
Four days later, the prime minister himself stepped aside to face a pending leadership tribunal and elevated Abal to become acting prime minister.
Members of parliament awarded themselves, department heads and judges a hefty 52% rise in salaries while teachers were stranded at year’s end for want of travel warrants.
And, for the first time since the institution was established, the census, which was to occur this year, was put off.
Five prisoners were shot dead as they tried to escape condemned cells and, the next day, the minister for correctional services declared that the shooting was okay.
The massive liquefied natural gas project started early works while the multi-billion-kina Ramu nickel project was delayed as a result of legal challenges to its proposition to dump tailings in a deep-sea outlet.
The court lifted the stalemate and, as the year was ending, work has begun in earnest.
PNG has seen the most dramatic, as well as the most positive, developments.
Economic activity in PNG continued to be buoyant despite indications that economic recovery on the global scene was slowing down and prospects for a double-dip recession was real.
Employment continued to be high and was growing, driven by the construction sector.
Credit from commercial banks to the private sector continued at very high levels and export volumes and values of major commodities continued to increase.
Government continued spending at high levels and local demand for LNG-related projects was high.
Inflation was at around 6% and the kina appreciated against most currencies, except the US dollar and the Japanese yen.
There was an overall surplus of K534 million in the balance of payments for the first six months of this year and the level of gross foreign exchange reserves, at the end of June this year, was K7,572.3 million, sufficient to cover about 11 months of imports.
The government recorded a total budget surplus of K101.3 million and public debt declined by K139 million to K6,875.8 million in June.
There are exciting times ahead.
PNG, today, stands poised to develop its extensive gas reservoirs, a resource that many industrialised economies rely on for their energy source.
As the pressure builds up worldwide, to turn to renewable and cleaner sources of energy, demand for gas will be stepped up around the world.
We must listen to the advice Minister for National Planning and District Development Paul Tiensten delivered when he handed down PNG’s record K4.04 billion development budget last month.
He said: “We have learnt from past irresponsible governments, which went on spending sprees with the expectation of huge revenue flows from the mineral sector, which had resulted in financial crisis and social economic problems.
“We do not want to be carried away by the promise or expectations surrounding the impending benefits of the LNG project.”
Wise words indeed. To use another well worn adage: “A bird in the hand is worth two in the bush.”
PNG’s economy is robust now without the LNG project or contributions from the Ramu nickel cobalt mine.
While we welcome and wait for major revenue inflows from these projects, it is the wise management of what we already have that is paramount and of critical importance.
It is, therefore, opportune that the acting prime minister has recalled all departmental heads to a meeting later next week to plan and design a path for the implementation of next year’s budget in each department and agency.
If we can manage what we have now, the larger inflows later will be better managed. If we do not, and spend in anticipation of future revenues, they will all go the same way – flushed out of PNG to some overseas bank account of service providers.