A daunting task ahead for new PNG PM
pp. 8-34 · Read in the full issue
Special Report
FOREIGN investors give
Papua New Guinea’s
newly elected prime min
ister a better chance than his predecessors of salvaging his country’s economy. Sir Mekere Morauta, 53, was elected by an over whelming majority of 99 votes to East New Britain Governor Francis Koimanrea’s five votes mid-July.
But the task facing PNG’s seventh
prime minister is daunting.
The former central banker won
overwhelming parliamentary backing
mid-July and said he would seek World Bank help in ordering the chaotic finances of the Pacific island nation.
“The sad truth is that the reality is even worse than it seems,” Morauta said after being sworn in.
The Bank’s response will be criti cal to his efforts to restore confi dence in the resource-based econo
my, rebuild foreign exchange
reserves and tackle poverty and ram pant crime.
Perhaps the most pressing issue was whether to extract the Pacific island nation from a deal to recog nise wealthy Taiwan. Morauta has since withdrawn diplomatic recogni tion.
Morauta’s predecessor Bill Skate took a U 552.35 billion (A 53.57 bil lion) shopping list with him when he went to Taiwan to broker a diplomat ic recognition deal last month.
Taiwan denies it bought the ties of its 29th ally.
But there is no doubt PNG needs help to boost reserves that have dwindled to an all-time low of US$B9.2 million (A$ 135.48 million).
It also needs the US$lOO million (A$ 151.88 million) it makes annual ly from exporting timber logs to China, infuriated by the Taiwan deal.
The handful of international com panies still operating in PNG have
cautious hopes for Morauta, educated by missionaries and at PNG universi ties. In 1970, he graduated with a Bachelor of Economics degree from the University of Papua New Guinea.
The University of Technology in Lae awarded him an honorary doctorate of Technology in 1987.
Aged 53, he has
been an economist,
a banker and
businessman, and
he retains a
reputation for probity
In 1990, he was bestowed the title of Knight Bachelor by the Queen and he was elected to Parliament as the member for Moresby North-West dur ing the 1997 national general elec tions.
He was fisheries’ minister from April 1998 to June 1999, until dumped in an unprecedented move by then prime minister Bill Skate.
“We have a prime
minister who understands
business and financial
management,” said Greg
Anderson, head of PNG’s
Chamber of Mines
Sir Mekere was the Managing Director of the Papua New Guinea Banking Corporation from 1983 to 1992. From 1993 to 1994, he was the Governor of the Bank of Papua New Guinea. From 1994 to 1997, he was executive chair of Morauta Invest ments, Ltd. (Delta Seafoods and Morauta and Associates). Aged 53, he has been an economist, a banker and
businessman, and he retains a repu tation for probity.
“We have a prime minister who understands business and financial management,” said Greg Anderson, head of PNG’s Chamber of Mines.
Oil company Chevron is hoping some political stability will con vince enough Australian industrial companies to commit to natural gas supplies from its giant PNG gas fields to justify building an under sea pipeline to Queensland.
“Our relationship with overseas customers can only be enhanced by the new government,” Chevron’s PNG country manager Keli Taureka said.
Morauta spent a year as governor of the Bank of Papua New Guinea in the early 1990 s before being sacked by a previous prime minister. Since then, the value of PNG’s kina has tumbled from more than 90 US cents to around 38 cents.
Morauta has adjourned parlia ment until the middle of this month while he reviewed the Taiwan deal and sought to gorge a strategy to draw the World Bank and Interna tional Monetary Fund back into talks they abandoned under Skate.
During Skate’s two-year rule, inflation rose from around four per cent to more than 13 per cent. No one knows how high the unemploy ment rate really is this country of 4.6 million. Even those with jobs often fall below the poverty line.
Per capita income averages less than US$35O (A 5532) a year.
Rather than take low-paying jobs, young people from squatter camps around Port Moresby are reg ularly recruited into “raskol” gangs blamed for much of PNG’s street crime and burglaries. Unchecked public spending has done little to
Continued on page 34
improve social services, but has dou bled the balance of payments deficit to 264 million kina (Asls2 million) last year from 123 million in 1997.
Mining and petroleum account for some 25 per cent of PNG’s .gross domestic product and up to 80 per cent of export revenues.
The government owns minority stakes in most mine projects, but leaves daily operations up to foreign partners.
Most of the commodities plucked from PNG are sold in US dollars overseas.
Mining companies such as Aus tralia’s Broken Hill Pty Co Ltd and Placer Dome Inc of Canada, had been pleading with Skate for tax reform to
encourage more exploration with lit tle success.
“Morauta has a difficult task ahead of him,” said Paul Coleman of Anglo- Australian miner Rio Tinto Ltd.
Ron Senior, chief financial officer of PNG’s largest single employer, New Britain Palm Oil Ltd, said the country’s politics had little impact on its operations.
However, just before Morauta’s election New Britain indefinitely postponed a planned float on the Aus tralian Stock Exchange without explanation.
Newspapers speculated this was related to the Taiwan deal, which New Britain’s 80 per cent owner Kulim Berhad of Malaysia feared could hurt exports to China.