Haiveta’s reforms

THE governor of the Bank of PNG, Sir Mereke Morauta, recommended in March that the kina be devalued (if PNG were to be competitive in the world market) and further cuts to public

spending to reduce the high budget

deficit.

He was subsequently sacked by the new government of Sir Julius Chan. Ironi cally, the sacking was part of Chan

government’s structural reforms package

which last month included a devaluation of the kina, and wide-ranging expendi ture cuts as advised by Morauta months ago.

The new deputy Prime Minister, Chris Haiveta, also said there would be a wage freeze until the end of 1995 for public servants, with no wage adjustments to offset the impact of the devalued kina.

He said that in the short term this would remove uncertainty about the kina’s future as a convertible currency and improve the profits of exporters.

Haiveta said only essential expenditure such as wages, paying off debts, and other government running costs would

be entertained.

“The public sector at all levels will be in a very tight holding pattern for the remainder of 1994. No other option is feasible.”

He outlined measures needed to arrest the decline in the country’s economic performance. “We have developed a system in the bureaucracy where leaders or ministers have chosen to bring in (expatriate) consultants and these con sultants form a tier of government which is ... sometimes against the best interests of this country,” he said in an interview.

Haiveta also said there would a number of immediate sackings “in both the political and public service sectors” but did not say how many. The measures were designed to set up a framework for the 1995 budget, to be announced next month.

“A balanced budget with zero deficit for 1995 is our target. Our plans will involve financing of the budget and we will increase the amount provided externally,

especially looking once again to our

traditional concessional sources ... such

as the World Bank ... and the Australian government.”

The kina exchange rate in mid- Septembers was at $U51.0493 and 5A1.40. □

Chris Haiveta: implementing severe measures