Papua New Guineans get

the financial message

From a Port Moresby correspondent

PORT Moresby has been given the

financial message—get rid of the Australian economic system and find one of your own that you can pay for.

That basically is the message of the leader of the World Bank mission team, George Baldwin, at the end of the mission’s three-week survey of Papua New Guinea.

“Papua New Guinea can never hope to achieve economic indepen dence so long as its expectations and standards are geared to what Aus tralia can afford instead of what the PNG economy can afford”, he said.

Present preoccupation with falling produce prices and a disastrous

balance of payments he dismissed as a passing problem. He spoke of being favourably impressed by government efforts to face up to the financial problems—mentioning budget cuts and public service restructuring.

But he also said he was off to Canberra—no doubt to find out just how far Australia is prepared to underwrite the Somare government

—Australian aid would be important in the World Bank’s judgment on PNG, he told Post-Courier reporter Peter Jackson. He went on to say that five unspecified projects were in

the pipeline.

And for once PNG politicians are starting to make mileage out of the Australian aid before the event.

Opposition leader Tei Abal called in February for Prime Minister Somare and Finance Minister Chan to go to Australia before the money men decide aid levels for PNG. It could be election year. It’s also a bad time to talk to Somare who is try ing to squelch the secession move ment on Bougainville, site of the mine that provides more than half the country’s revenue.

Not that the secessionists seem to worry the World Bank. Other coun tries had similar internal problems but these had not prevented the bank from making loans, Mr Baldwin said.

This must be a relief to Papua New Guineans who are, at present, rather doubtful on the point.

Meanwhile, in spite of Mr Bald win’s somewhat off-hand dismissal of the current recession, the PNG economic position is grey indeed.

The “tighten your belts” warnings that have peppered statements by Prime Minister Somare and Finance Minister Chan in recent months are finally reaching their marks.

But it has taken last February’s gloomy facts to press home to the public sliding trade statistics, alarm ing drops in copra production, a K7O million fall in Bougainville’s copper profit.

The first impact of hard times ahead came with the 1975/76 budget tax rises which cut wages back when they came into effect as a pre- Christmas gift to the government.

But now individuals are fully realising that money is not going to be around for a while, and that everyone, both the low and high income earners, are going to have to keep trimming budgets as prices

spiral.

Latest trade figures from the Bureau of Statistics show a K 8.14 million trade deficit for November. 1975, compared with a K 11.15 mil lion surplus in November, 1974.

And the finance experts forecast continuing grim prospects for the next two years.

For the first five months of the 1975/76 year, the overall deficit was

K 24.4 million, compared with a sur plus of K 45.6 million in the same period of the previous year. Copper, coffee, copra, tea and timber—the main exports—earned barely Kl4O million, a drop of K7O million on similar figures for 1974/75, At the same time costs of major imports—vehicles, food, petrol and oil —were about the same as last year, about K 64 million.

The main factor influencing trade figures was, of course, the poor world price for copper, which usually jams well over half the country’s overseas revenue.

Total copper earnings during the first five months of this financial /ear were K 60.4 million compared vith last year’s K 102.8 million.

Bougainville Copper’s annual pro fit, announced the day after the rade figures, reiterated the unpalat tble news. TTie company’s profit fell >y almost K7O million, giving the -overnment a meagre KlB million n royalties and tax, compared with C 69.96 million in 1974/75.

On the primary produce side, the Minister for Primary Industry, Mr loyamo Sali, announced that the "opra Marketing Board had not been ble to fulfil its February contracts, hortages had also forced the closure f the Coconut Products mill. Mr ali said the board was worried that le losses would penalise the board nd ultimately growers would miss ut. He urged them to continue pro uction in spite of low returns.

The Port Moresby Chamber of ‘ommerce said it thought the Dlution lay in a review of the □vernment policy on plantations so lat production levels could be laintained. Present policy encour ges the handover of expatriate wned plantations to local owners, sually village groups.

Another gloomy aspect of the ;onomic situation is the possibility f France, Belgium and Italy trying > block Papua New Guinea’s mem ;rship of the Lome Convention, lembership of the convention, link 's 46 former colonial possessions i Africa, the Caribbean and the acific is vital to PNG trade pre sences in European Economic ommunity countries.

Yet at the same time as the de essing news built up, and the 'orld Bank mission called for a langed system (sentiments ap auded by Somare and Chan) the ustralian-oriented arbitration sys m granted public servants a K6O year pay rise based on wage in jxation.

One of the brighter spots amid e grey has been the price of )ffee. Growers are getting their :st price for years and the Coffee

Marketing Board and the Primary Industry Minister are urging them to make the most of it.

Frosts in Brazil, rain in Columbia, the Guatemala earthquake and the Angolan war have all contributed to the price rise, exporters say.

There are indications of steady to firm markets for a few months still to come.

The other cheering prospect, but one that is not going to help relieve the immediate economic problems is the apparent success of the recent overseas mission on the National Investment and Development Authority. Labour and Industry Minister Gavera Rea says that European businessmen are interested in forestry, fisheries and agriculture and in setting up processing plants. r> . , . , ... . t .. • ® ut . tbe s are stl at the . ta Hi n iL S agC t a ? d th ? B° v^ rnment will have to set to and work out specific projects and requirements for potential investors.