A new government in PNG is always formed from within

Rainbow Paita, MP for Finchaffen Open and senior minister in the Marape coalition

Rainbow Paita’s name often floats around when there is an attempt at vote of no confidence, either as an operative or candidate for the prime minister’s position. Paita has all the qualities for a PNG prime minister, but it’s not the qualities you are thinking of:

  1. Prime Ministers in PNG are changed from within

Almost all governments in PNG are changed from within. And this goes all the way back to Chan replacing Somare in the first vote of no confidence in early 80s to Marape filling the vacancy in 2019 when O’Neill resigned to avoid humiliation of a vote of no confidence. Paita is part of the “inside” team of Pangu and government caucus. It wouldn’t be a surprise, and if he emerges as a contender.

  1. Ambiguous

Clearly principled politicans rarely get the high post. PNG is a prime Melanesian case where ambiguities and consensus and compromise reigns. If you are a Gary Juffa or a Brian Kramer or an Allan Bird, you have set yourself a very clear high standard. Public expectations for you to play by the rules is very high, otherwise you’d appear to be the embodiment of hypocrisy. This is why all three men have no followers in parliament: either one men party or no party men.

PNG’s politicans are so forgiving: they criticise each other, and then get together, forgive each other, and get along. This was the case with Peter O’Neill (remember Douglas Tomurisea saying sorry to O’Neill with the life of an innocent pig?) and Marape (remember the photo of Marape and William Duma hugging after Duma failed to replace Marape as a PM candidate and then voted him as PM, only to “slide unconsciously” to and fro? – Duma’s own words)

Rainbow Paita is from the same fabric as Peter O’Neill and James Marape. He’s the type that would work with his enemies and forgive others in the name of advancing the coalition’s interests.

Don’t get me wrong: this is not the preferred type of leadership. A principled government or prime minister is always preferable, it’s just that it doesn’t make you the prime minister in PNG.

  1. Anyone but Marape or O’Neill

By now, Papua New Guineans just want the prime minister replaced. It doesn’t matter who, so long as it’s not Marape or O’Neill. If you have the ability to break the government, you get the social liscense of the populace, and therefore, their MPs’ support.

  1. My preference would still be Allan Bird. But for that to happen, we need a miracle of biblical proportion. MPs who’d put the national interest first.

The views expressed here doesn’t claim Rainbow Paita is confirmed to be contesting the prime minister’s position. It’s all social media rumours. The point of this piece is that for one to become a prime minister in PNG, you’d need a Rainbo-like characteristics. It’s not the preferred characteristics, but historically it’s the type that maketh the prime minister.

IMF and World Bank WRONG about PNG – Allan Bird

Alternate Prime Minister Allan Bird

Its time to Take PNG Forward

I disagree with the position of the IMF and World Bank in relation to the devaluation of the Kina now under way.

The IMF believes that by depreciating the Kina, this will encourage exports and make PNG production cheaper. In fact the opposite is true.

In the last 49 years, the PNG economy has not diversified much and therefore a significant depreciation is not going to automatically result in increased production and exports. We had a significant depreciation 24 years ago and that did not result in any significant increases of production in anything. It just led to more hardship for ordinary people.

This is because PNG has not invested in the productive capacity of the economy, hence it is not possible to increase production. Only the extractive sector is able to do that but almost all of them are operating at peak or declining capacity.

I just saw a 10kg bag of rice increase from K50 to K56 a bag. This is the second price increase this year. Depreciation is already hurting our ordinary people. While some low income earners are getting a tax break, the vast majority of our people in the informal sector cannot access similar assistance.

The Marape government in chasing cheap loans from IMF/WB and having resorted to printing money may have unknowingly placed a rope around the necks of ordinary citizens.

I believe a reasonable trading band of around 30 USc and 40 AUc is what we should be aiming for.

As I wrote in my previous article, we must restrain government borrowings and improve fiscal discipline. We must live within our means.

We must also redirect spending not just on economic enablers but also on the productive capacity of the various sectors. We must also look at tax incentives to encourage private sector investment to help diversify our economy.

We must decentralize our government structure as a means of encouraging spread of private sector investments. The engine room for growth is in the provinces, not in Waigani.

We must have a smaller central government that oversees provinces and doesn’t compete with them.

We need to expand private sector investment and support private sector to grow both the economy and jobs. It is not government that grows the economy, private sector does that. Too much government control, coupled with corruption is killing our economy.

The Marape Government has borrowed K32 billion in 5 years but they have only proven that government is incapable of growing the economy because economic growth has simply lagged behind government borrowing. I hope all current and future leaders learn something from this grave mistake and not repeat it in the future.

We have a situation in our country where the government thinks it should be running businesses and it fails miserably. We should focus on governing and leave business to the private sector.

It’s time for a reset. Marape has taken PNG backwards by 20 years. It’s time to take PNG forward.

PNG IS NOT PRINTING MONEY – Government responds to Allan Bird

Ian Ling-Stucky

Press statement

Once again, the Opposition is trying to mislead the people of PNG. A number of their recent statements claim that PNG is printing money to fund the budget deficit, stated the Minister Assisting the Prime Minister on Treasury Matters, Ian Ling-Stuckey.

“This is just wrong.The IMF verifies this is wrong. It is a condition in the IMF program that PNG does not print money to finance the deficit. When we pass an IMF review, as we have just done again with the recent IMF mission, this means we have not printed money. This is not an imposed condition from outside – it is a condition that the Marape-Rosso Government believes in. And once this claim of printing money is proven to be false, then the rest of their arguments collapse with no credibility.

“Of course, the new Opposition may be remembering the disastrous budget management of their old Opposition friends. PNG did print money – known as the “slack” arrangement during 2014 to 2016. This was at a time when economic mismanagement had led to a massive blowout in budget deficits – from a planned budget surplus in 2012 to a budget deficit of K3,278m or 10.4% of GDP in 2013, K3,579m or 9.5% of GDP in 2014, K2,785m or 7.0% of GDP in 2015 and K3,087m in 2016. No budget repair going on through those years! The only trick in 2017 was to revalue the size of GDP by 50% – just made their budget deficit to GDP figures look just a little bit better.

“These high deficits and rapidly growing debt, which was 2.5 times larger in just 4 years, meant the O’Neill government was struggling to finance such huge deficits. Domestic interest costs had risen to over 12% for government bonds, there was no credible budget repair program in place to attract low-cost international financing, Treasury Bond auctions kept failing. Reports suggest the Government at the time forced BPNG to start printing money, even though it was probably illegal for them to do so.

“In contrast to the above desperate situation, the budget is now in a much better position. Domestic interest costs on government bonds have dropped from 12% to 6%. There is a credible and performing 13 Year Budget Repair Plan that has reduced the debt to GDP ratio from 8.9% of GDP in 2020 during COVID, down to 4.3% in 2023 and on track for a surplus by 2027. Treasury Bond financing was regularly oversubscribed during 2023 despite offering lower interest rates, and we are well ahead of pro-rata raisings in 2024. The Marape Government introduced changes to the Central Banking Act which made very clear that printing money in times such as 2014 to 2016 is illegal. Absolute limits on the size of BPNG holdings of government securities have been introduced and put into the new CBA laws. These are being monitored by the independent IMF.

“The Marape-Rosso Government worked hard to fix the errors of the previous government. The performance over the last five years is so much better. The Opposition claims we should exercise fiscal restraint. We are. We are cutting the budget deficit by a billion Kina a year. PNG’s rate of budget repair is ranked in the top 10% of all countries in the world. This is the right balance between repairing the budget, and not causing unnecessary hardship to our families by cutting even harder. The Marape-Rosso Government understands the budget problem, and has demonstrated the courage to deal with it.”

Hon. Ian Ling-Stuckey, CMG. MP
Minister Assisting the Prime Minister on Treasury Matters
12 May 2024

Alternate PM: Allan Bird on inflation

Alternate PM: Governor Allan Bird

By Allan Bird

Why is the Kina depreciating so rapidly?

PM Marape in his response to the concerns raised by our ordinary people affected by rising cost of living due to the effects of the depreciating Kina and inflation leaves much to be desired.

The biggest contributor to inflation and the depreciation of the Kina in the last 5 years is the fiscal behaviour of the national government.

We have been boasting about consecutive record government budgets and we never speak of undisciplined Government expenditure funded from printing money. If a record budget does not strengthen the economy then its size does not matter.

By increasing the money supply within the local economy without the backing of a strong economy the Government has essentially oversupplied Kina thereby rendering it worthless. This is the net effect of printing money. Printing money only works in large diverse economies. Our economy is too resources reliant and susceptible to external shocks.

Whats happening is that all costs are going up and government is unwilling or unable to increase wages to off set inflation. Inflation is running at around 5% a year, so adjusting wages upwards every year is unsustainable without a corresponding increase in productivity. Also giving free handouts to the people is not a smart longterm solution.

Meanwhile, the Central Bank is struggling to control the rapid decline in the value of the Kina so that it can contain runaway inflation.

The PM is telling everyone that we have to wait for the big mining and oil and gas extraction to commence operating inorder for the people to get some relief. Are we back to short term pain for long term gain again?

If we had cut back government spending on wasteful projects by an additional billion kina a year, that would have meant K5b less in printed money.

If we had allowed Porgera to operate, that would have meant an additional $6b in FX we would not have had to borrow. Not to mention it’s multiplier effect on other businesses. That’s what the PNG economy is experiencing.

Unfortunately our Government has borrowed K32 billion in 5 years. This number equals all borrowings by all Governments since 1975. Our total official debt is K64 billion and half of that was borrowed in the last 5 years.

PMJM tells us GDP grew by K30b since he took office. Well debt grew by K32b in the same period. This does not include other debts currently sitting off the books.

The fix is simple but it will require strong political will to do it. We must first live within our means. Stop looking for ways to borrow money to fund all kinds of low return initiatives Good government is about spending for the collective interest, not on narrow political interests.

Second, we must rescind the decision to create elite capture mechanisms like KPHL. Bring in the Sovereign Wealth Structure and start putting real money into it and keep it in the Central Bank to provide stability and back stopping for the Kina. Whats the point of boasting about K12b in FX Reserves when your total debt is K64 billion and half of that is foreign denominated loans?

Given our lack of economic diversification, we are susceptible to external shocks and this can significantly affect the currency flows into our economy.

We must manage our economy with prudence and not expect some windfall revenue in the future to rescue us. This practice of gambing on future revenue by borrowing and expending today on projects with dubious returns is exactly why we are in trouble now.

PNG needs to tighten its expenditure and exercise fiscal restraint. We need leaders who understand the problem and have the courage to deal with it.

Our people cannot absorb any more pain. It seems only the cocoa growers are exempt from the struggle for now but every other PNGan is feeling the pinch.

Belen Namah calls for apology from Biden

NAMAH CONDEMNS UTTERANCES BY USA PRESIDENT JOE BIDEN

Press Statement
3rd April, 2024

The Chairman of Parliament Committee on Foreign Affairs, International Trade, Immigration & Defence and Member for Vanimo Green River Electorate, Hon. Belden Norman Namah has condemned utterances by the United States President Joe Biden describing a situation in WWII where his uncle was shot down and eaten by cannibals in New Guinea.

First of all, there is no such country called New Guinea in the Pacific.

But if President Biden was referring to Papua New Guinea, Mr. Namah said “President Biden’s utterances are unfounded, unacceptable and utterly disrespectful to the Independent State of Papua New Guinea and her people. The truth about the fate of his uncle Ambrose has never been established and President Biden knows that. Yet he chose to reverberate the mystery with cannibalism. This is no slip of the tongue.”

For Prime Minister Marape to say it may have been a slip of the tongue is not only an understatement but also an irresponsible statement unbecoming of the Head of the Government of Papua New Guinea.

Clearly, Marape failed to condemn the despicable words from President Joe Biden. He instead chose to speak for Biden saying it may have been a slip of the tongue. “Speak for yourself and your Country, Prime Minister”, said Mr. Namah.

Mr. Namah further added that Marape’s calls for USA to help clear its WWII mess is a kneejerk reaction and shows that he is not aware of the “Render Safe Programme” that has been ongoing in the Country to rid our communities of unexploded WWII ordinances.

Mr. Namah said “there’s a lot to be desired from the conduct of James Marape as the Chief State Diplomat. Its even laughable “wheezy whassy diplomacy” to say the worst. Recently he came to the defence of his Foreign Minister who apparently labeled Papua New Guineans as primitive animals”.

“Stand up for your Country and People, Prime Minister, and defend Papua New Guinea at all cost without fear or favor,” said Mr. Namah.

………………………………………………
Hon. Belden Norman Namah, MP
Member for Vanimo Green River Open Electorate &
Chairman of Parliament Committee on Foreign Affairs, International Trade, Immigration & Defence

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