‘Recovery possible if govt acts fast’

THE economy stands to make a quick recovery this year if the Government acts early to facilitate recovery in a fragile environment, says the PNG Extractive Industries Transparency Initiative (PNGEITI).
Head of the PNGEITI Lucas Alkan said the country was slowly recovering from the Coronavirus (Covid-19) challenges.
He was commenting on a recent Word Bank Report, which projected the PNG economy to grow by around 4 per cent this year, largely driven by growth in the extractive sector.
The projection was made in the bank’s Economic Update for PNG released in March.
Its projection stems from its estimate of the economy returning to positive growth of 1 per cent in 2021, after contracting by 3.5 per cent in 2020.
“The economy is currently in fragile state, particularly when it is emerging from the aftermath of the Covid-19 pandemic induced disruptions that had devastating impact across all sectors of the economy,” he said.
“The pandemic has created room for complacency and brought about new approaches to living and conducting business as we have been introduced to the new normal way of living and doing business in recent times.”
He said the Bank’s growth forecast was dependent on a number of risk factors “at play relating to the extractive sector”.
They include external risks
such as the the rising fuel prices caused by the Russian-Ukraine war which “we have little or no control over”.
“However, there are other risks that can be managed in the remaining months of this year,” he said.
“Firstly, the Porgera mine needs to be re-opened immediately to contribute to the growth projected.
“The prolonged delay in re-opening has resulted in significant revenue loss to the State and loss of employment and benefits to local communities.
“The shutdown of the mine is having a direct impact on the current foreign exchange shortage in constraining business operations domestically.
Alkan said “realistically, we may be looking at around October or November for the start-up. But it would be almost end of the year”.
“So for Porgera to contribute to the projected 4 per cent economic growth seems unlikely”.
He also said the “inherent political risk associated with the General Election 2022 and the formation of a new government “is likely to delay any efforts to start up new resource projects currently in the pipeline”.
The other projects include Wafi-Golpu, Frieda and the Papua LNG.
Alkan said there was a “real risk for the Covid-19 pandemic to surge again, disrupting economic activities in this very fragile environment.”