The Morauta Government, coming to office with high hopes two years ago, has seen the economy do very poorly in 2001. This poor performance has occurred despite strong efforts by the government to improve the economic environment through reform of institutions and policies. While the economy did well in 2000, in 2001 real GDP is likely to show no growth and could even decline by 2?3 per cent, especially if global economic conditions deteriorate as widely expected. Papua New Guinea?s creditworthiness has also been downgraded. The reasons for the seeming collapse in confidence in the economy are not easy to pinpoint.