An International Monetary Fund report on the performance of Papua New Guinea's economy in 2016 is yet to be released by the government despite reassurances last week from PNG's prime minister Peter O'Neill that it would be released soon.
The Bank of Papua New Guinea had earlier refused to approve the release of the 2016 Article IV report which the IMF completed in November last year.
In a statement the bank outlined six areas of concern including the IMF's calculation of PNG's debt-to-GDP ration, its months of import cover and its foreign exchange market.
But Economist Paul Flanagan, who has worked with the PNG Treasury Department, and is now with the Australian National University, told Koroi Hawkins PNG's opposition to and withholding of the report reflects badly on both the government and the country's Central Bank.
Koroi Hawkins reports.
The Papua New Guinea Prime Minister Peter O'Neill.
Photo: AFP / Peter Parks
Transcript
PAUL FLANAGAN: What's interesting is that for the majority of reasons, indeed four out of the six reasons the bank of PNG puts forward they're exactly the same disagreements they had for the 2015 article IV report that they were happy to release on time without this delay or without this reconsideration. So the only new thing that seems to be in this report, and the bank of PNG has now clarified, that this is indeed the case - the IMF has not accepted the updated GDP numbers that the PNG government has put forward and that means it's now in breach of its debt to GDP ratio in legislation.
KOROI HAWKINS: So agreeing to this article IV mission report would in fact be an admission that PNG is indeed in dire straits?
PF: Well certainly that there has been a serious recession in the non-resourced parts of the economy. That will be something that will also come out, but there's also probably another couple of things that PNG didn't pick up on that are likely to be in the report and likely to be reasons why the government's not happy to release it. One of those is confirmation the bank of PNG is now financing the deficit directly, even though it undertook not to do that in 2015, and the second one is on the exchange rate. PNG has dug itself into a real hole with its exchange rate restrictions and the fat that it has essentially moved to a six peak against the US dollar and the IMF would have been very critical of those decisions.
KH: And do you think that's a big factor being an election year in terms of a withholding or the obvious outright objection to the report.
PF: I think so. I would think so. The O'Neill government is obviously looking forward to stand on its record of economic management and the IMF report, i think, on the basis of what we have seen, would suggest that the record is considerably worse that what the government has been portraying. Indeed PNG has moved into some of the worst recession in the non-resourced economy since the crisis since the late 1990s it has started printing money again, it's lost of control of the foreign exchange market which is really hurting growth. These are things that the government would not have wanted and independent arbitrator to come out and say - there are indeed serious problems with economic management
Economist Paul Flanagan.
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