State pushes SWF plan

THE Sovereign Wealth Fund is one of the keys policies the government is driving to manage the substantial fluctuations in the mineral and petroleum revenues, former prime minister Sir Rabbie Namaliu says.
Sir Rabbie said it would help ensure that the potential adverse risks from the mineral boom could be managed in ways consistent with macro-economic stability and lower inflation.
Representing Prime Minister Peter O’Neill in Kokopo, East New Britain, during the sovereign wealth fund (SWF) Islands regional forum in Kokopo, Sir Rabbie said the awareness visits organised by the government team were the first of its kind and urged the public to join in the dialogue.
He said the SWF was a new concept to the people of Papua New Guinea and he was pleased that the government team on it was undertaking this public information, education and awareness programme across the country to foster understanding on a matter of national importance.
He said PNG was part of the global economy and there were always challenges and risks faced in the country’s economy.
He said the economic and fiscal outlook for PNG in 2011 and the medium-term was positive but there were risks.
Sir Rabbie said economic overheating was a major concern in the country, with annual inflation now forecast to be 8.7% in 2011, an upward revision to 2011 budget forecast of 8.2%.
“This is largely due to the high level of economic growth, a continuing shortage of skilled labour and land, which pushes up wages and rental prices, and higher food and fuel prices from the global demand,” he said.
Sir Rabbie said while the domestic economic outlook was positive, there were risks, including volatile and falling commodity prices from the current high levels, negative domestic factors like landowner issues, bad weather, mine disruptions and heightened inflationary environment.
He said considering these risks, the national government was mindful of the need to promote macroeconomic stability and to provide prudent fiscal management.
He said establishing a sovereign wealth fund was one of the significant decisions undertaken by the government to reduce some of the challenges.
Sir Rabbie said the importance of the fund could not be understated as it aimed to ensure PNG’s natural resources revenues were well managed, used and supported the economy and future development of the country as envisaged in the PNG development strategies.