PORT MORESBY, June 16, 2019 (BSS/AFP) – Papua New Guinea’s new prime
minister has an ambitious — cynics would say far-fetched — objective of
turning one of the world’s poorest countries into the “richest black nation”
on earth in just a decade.
If national economies were like football teams, then Papua New Guinea would
be near the bottom of the table struggling to avoid a relegation dogfight.
Violent crime and corruption are endemic, reliable electricity is rare, and
population centres sit like isolated city-states, surrounded by trackless
jungle and mountain ridges that soar into the equatorial sky.
As rich as Papua New Guinea is in culture, language and beauty, it is the
153rd most developed country in the world out of 189, according to the United
Nations — doing slightly better than Syria, marginally worse than Myanmar.
New prime minister James Marape wants to change that. He has promised that
within ten years his compatriots will live in “the richest black Christian
nation” in the world.
That is not going to be easy. The current titleholder is the highly
industrialised economy of Trinidad and Tobago, where the average resident
earns around 833% more than Papua New Guinea.
If the British territory of Bermuda were also included in the rankings, the
task would be even more daunting.
Papua New Guinea’s economy would have to grow at a world-beating rate of
around 30 percent per year, every year for the next ten years just to catch
up.
“PNG has never experienced 30 per cent growth in the past; nor has any
other country for that matter, at least not for any sustained period of
time,” said Maholopa Laveil, a lecturer in economics at the University of
Papua New Guinea.
To reach his lofty goal, Marape appears to be betting on a surge in gas
revenues and more of that cash staying in the country.
He has hinted that he may look to renegotiate a massive liquefied natural
gas (LNG) contract with Total and ExxonMobil that would double national
production to better benefit the local economy.
He has also promised to stop the export of unprocessed hardwoods and tackle
corruption.
But the strategy comes with risks.
– Dashed expectations –
The World Bank has warned that even before a second LNG project comes
online, the economy has “become increasingly concentrated in petroleum and
gas-related activities”.
That, the bank warned, raises Papua New Guinea’s vulnerability to the
vagaries of international energy markets and natural disasters — like the
7.5 magnitude quake that froze production and stalled the economy in 2018.
Even the country’s existing PNG LNG project — which started to flow in
2014 — has failed to live up to expectations.
It required a controversial public loan worth more than a billion
Australian dollars ($700 million) and helped national debt spike.
The project was forecast to increase GDP by over 97 percent, but according
to Paul Flanagan — a former Australian government official who runs the
influential PNG Economics blog — the increase has been closer to six
percent.
“Overall, the PNG LNG project massively over-promised and then failed to
deliver,” one of his recent blog posts read. “For household disposable
income, the prediction was an 84 percent improvement. The outcome is a
decline of 9 percent.”
Flanagan believes that regardless of any energy boom, Marape — a former
finance minister — will need to undertake difficult currency and trade
reforms if the country has any hope of growing sustainably.
“Time will tell if the new government will tackle such difficult political
economy challenges, challenges that must be addressed to make PNG a much
richer black Christian nation,” he said.