Politics
...And The Biggest Challenge Now?
Steering PNG out of its economic woes
Papua New Guinea's new Prime Minister, Sir Michael Somare is now faced with one of the biggest challenges of his political career. That is to steer the country out of its economic woes.
Depressing economic indicators in recent months provide no easy task for the veteran politician as he takes over the reign for the next five years.
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- a budget deficit of K127 million recorded in August,
- a declining investment climate,
- a contraction in income generating activities in the mining and petroleum sectors,
- a dropping value of the Kina,
- plunging shares of major companies,
- dwindling rate of export products, and
- a falling employment rate.
Respected institutions and individuals, including the International Monetary Fund (IMF), Bank of PNG, senior bureaucrats, the outspoken Chamber of Commerce and Industry (PNGCCI) and others, have repeatedly warned of the worrying situation.
Among the commentators, PNGCCI appears to paint the most depressing picture of the economy.
The chamber, in a statement last month, said the overall economic activities in the country had declined, and warned it was heading towards economic collapse.
Chamber president, Michael Mayberry said businesses were closing down and investment had declined sharply.
"We have to decide what we want for this country and what we want for our children and then work out what we want to achieve because if you talk to the people, they don't know where the hell we are going," Mayberry said. In terms of the government's financial position, an IMF report yet to be released, has indicated that in the first three months of the year, the former government was already running at a deficit of K127.7 million. This is expected to reach K500 million by the end of the year with public debt at almost K8 million.
Socially, infrastructure services in particular have become non-existent.
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This is severely affecting education and health services mainly in the rural areas. The chronic crime problem still remains a major concern.
Former Prime Minister, Sir Mekere Morauta, while congratulating Somare admitted to some of the problems facing the country.
Morauta said: "Our country's problems and challenges were large then, as they are large now. My colleagues of the past three years and I hand over to Sir Michael and his team some achievements and some work in progress that are the property of all of our country, and which they will find helpful through the period of their heavy responsibility."
The workload definitely would be heavy for Somare and there are no quick fix solutions and no direct answers.
But "the Chief" was aware of the situation well before deciding to vie for the top post. He went to the polls knowing that the task would not be easy if he was to get into the top seat.
Somare feels passionately about his country, which he led to independence in 1975 and he will not sit back and see it fall to pieces. He had made a decision to do something about it and he is stopping at nothing.
He has the backing of well-read and highly educated Cabinet members who will provide the advice he needs and the support of great many Papua New Guineans to keep the country afloat.
He was there before and this time he knows which ropes to pull and where to turn the wheel to steer the country towards recovery and prosperity for its more than five million people.
The widespread support for his return to the top job had been reaffirmed by the absolute majority of 88 to nil votes from Parliament's 103 members on August 5. It is a political authority that gives him the antidote to the country's economic malaise.
"I am confident in the ministers of my government and in the Members of the House of Assembly, but above all, I am confident in all our people ‹ the men and women of our nation.
"I am sure we can make decisions. We are aware that the country is living beyond its means," he said.
This confidence is also acknowledged and expressed by the international community and nothing is more encouraging for Somare when Australian Prime Minister John Howard, visited him only days after his election.
Australia pumps more than $A350 million in aid into the country and stands ready to help. But being confident as he is, Somare told EM TV: "We don't have to ask Australia right now. But yes, we will if we have to."
During his talks with Somare, Howard said the new government must continue to pursue economic reforms.
Howard stressed his intention to continue Australia's strong support to Papua New Guinea. "But like any dealings between two independent, self-respecting countries you sit down and work out what is a proper basis for forwarding assistance," he told a media conference.
"We've sought to link assistance to some changes and reforms and I know the government here is as understanding of the reform challenges as I am," he said.
Papua New Guinea is by far the largest recipient of Australian foreign aid and will continue to be, Howard said.
"There is no country that is more ‹ in my assessment ‹ deserving of Australia's overseas aid assistance than this country."
Speaking before formally sharing his thoughts with his new cabinet, Somare reiterated his election statements that he would institute widespread cost-cutting measures to save money.
He said the exercise would cover the public service and leaders.
This would start from small in-house matters like limiting the use of telephones, the use of office stationery, equipment, and other facilities. The scope of the measures would be expanded to include things like limiting the number of vehicles owned by senior bureaucrats and parliamentarians, and reducing other large forms of spending.
Citing South Korea as an example, Somare said when the country went into recession, the Korean people sold their watches, rings and other priced items to make money.
But he said the situation in Papua New Guinea would be different because 85 percent of the population are in the rural areas.
"But for the few well-to-do, we need to assess ourselves, starting with parliamentarians. Self-sacrifice is needed and I am confident that we can do it. We need to institute prudent management."
The prime minister said he would look at things like doing away with extra allowances for MPs. He said if a member has two vehicles, he has to give one away.
He would also look at the K1.5 million rural development fund yearly allocation for MPs. While the fund can remain, the amount needs to be reduced and funds should be allocated to essential projects only.
Somare said these would form the basis of a mini budget which he is expected to introduce next month.
Commenting on other issues apart from the economy during the EM TV interview, Somare touched on the problem of corruption in the country. He said leaders have often been blamed as being corrupt, although corruption also exists among the small people as well.
The prime minister said institutions like the Ombudsman's Commission, Transparency International and other anti-corruption bodies use very big words when they discuss the topic. But they make no effort to address the root causes of the problem.
He cited loopholes in the Leadership Code where a leader can escape prosecution once the leader resigns from office.
Several former MPs from the previous government resigned after they were implicated in the Leadership Code.
Somare also touched on problems experienced in the recent elections. Compared to those in the past, this year's polls had been riddled with problems, including delays in polling, double voting, destruction of ballot papers, illegal printing and distribution of extra ballot papers, and the list goes on.
The elections had also been marred by violence, especially among supporters of candidates, resulting in several deaths in the Highlands provinces. Somare said he would ask for an inquiry in parliament and also look at the possibility of inviting a Commonwealth team to be involved in the inquiry. The Prime Minister said the Secretary-General of the Commonwealth, Don McKinnon called him to congratulate him and also suggested the involvement of a Commonwealth team.
"There is evidence of the need for a review. I will be responding and I will be asking them to come," he said.
