Papua New Guinea economic survey: fiscal discipline needed
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Duncan, Roderick
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Crawford School of Public Policy, The Australian National University
Asia Pacific Press
Asia Pacific Press
Abstract
Improved macroeconomic management has been a significant
achievement of the Somare Government and the Bank of Papua New
Guinea. But, despite the high level of minerals revenue, in recent years
the public debt has not been reduced significantly, recurrent spending
has increased rapidly, and the 2007 Budget is very vulnerable to
downturns in minerals prices. Further, the lack of progress in
overcoming the institutional problems facing investors means that it is
likely the economy will not achieve the 4 per cent GDP growth
forecasts for future years. Of particular concern is the likelihood of a
‘perfect storm’ of election-year misappropriation, given the
combination of huge windfall gains from the high mineral prices
committed to vaguely defined investment programs and politicians
having in mind the nearly 80 per cent turnover at the 2002 election.
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Pacific Economic Bulletin, Vol. 22 , No. 1, 2007
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