Papua New Guinea’s Prime Minister Peter O’Neill says the current wave of economic reforms are vital if the country is to be competitive and living standards rise. He spoke with Business Advantage PNG following his opening address to the 2015 PNG Advantage Investment Summit in Brisbane last week.

Papua New Guinea’s Prime Minister Peter O’Neill opens the 2015 PNG Advantage Investment Summit

The government has introduced a series of economic and institutional reforms in 2015, designed ‘to improve the way we conduct business in PNG,’ according to Prime Minister Peter O’Neill.

Those reforms include establishing a Sovereign Wealth Fund, a National Procurement Authority (to award and oversee government contracts), a tri-partite Kumul structure to house state-owned assets and enterprises, and an Independent Commission Against Corruption.

Lost opportunities

The reforms are necessary, he told Business Advantage PNG, because PNG ‘has lost a lot of opportunities’.

‘We have had great successes in the development of world-class projects in the past. We have received excellent cash flows from it.

‘But we have misspent much of it in the past 40 years or so and our people’s standard of living has not improved as much as we would expect.

‘As a result of that, we needed to build structures that are responsive, competitive and be able to deliver the services that our people truly deserve.’

He said he was pleased the business community supported the reforms.

‘We are laying the foundations now and I know that if we continue to maintain this pace over the next five-to-ten years, PNG certainly will be a different place.’

Willingness to change

O’Neill told Business Advantage PNG that, while projects like LNG plants, the digital economy and structural reforms will be positive and necessary, ‘the most positive contribution’ PNG’s people can make to the economy is a willingness to change and a belief they can achieve anything they set their minds to.

‘People need to believe in themselves. Change must come in the mindset of our people. That is the huge contribution that is going to change PNG’s destiny.’

He said he was personally pleased with his government’s education reforms and improvements to health, but admitted there was still a long way to go.

‘We are also improving capacity and funding to the most remote districts throughout the country, where there has never been evidence of government funding.

‘For the first time in 40 years, these communities are building up and waking up to ensure their citizens are getting better services that they fully deserve.’

O’Neill’s speech to the 2015 PNG Advantage Investment Summit in a nutshell

• The budget deficit will blow out from K2.2 billion to K4.8 billion;
• A supplementary Budget will be introduced next month and non-essential spending is being deferred;
• Projected growth for this year has been cut to 11 per cent from 15.5 per cent,
• Inflation for 2016 is projected to grow at 5.6 per cent, assuming commodity prices will improve next year;
• Public debt is estimated at K13 billion Kina, around 33.2% debt to GDP ratio;
• 60% of debt is domestic debt, 30% concessional (ADB and World Bank), 10% commercial;
• No increased new taxes.

To read the Prime Minister’s complete speech and view other presentations from the 2015 PNG Advantage Investment Summit, click here.