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The Contemporary Pacific 14.2 (2002) 456-461

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Papua New Guinea

David Kavanamur
University of Western Sydney, Blacktown Campus

Years of unabated and systemic corruption within Papua New Guinea's government machinery and preoccupation with political self-aggrandizement over economic rationalities finally took visible toll on the country's economy in 2001. Anyone familiar with the country's past glory days strolling through the streets of Port Moresby would no doubt confront the stark realities of poverty in the eyes and physical appearance of most city dwellers. Indeed, Prime Minister Sir Mekere Morauta concedes that the 1990s was a decade of lost development for Papua New Guinea, evidenced by the country's disappointing human development indicators (Post-Courier,18 Oct 2001).

With a population of over 5 million people (up by 36 percent since the last census in 1990) and a growth rate of 3.1 percent compared to 2.7 percent in the last decade, the Asian Development Bank (ADB) declared that over a third of the population now live in absolute poverty (ADB2001). The country's average income fell by almost 75 percent from a high of US$1,300 in 1994 to US$744 in the millennium as the economy entered a nontransitory period of recession (National,24 Sept 2001). Public debt rose to K8 billion in 2001, compared to K3 billion in 1999 when Morauta took office. Morauta's long and winding "road to recovery" and promised "date with destiny" (made in November 1999 during the parliamentary presentation of the 2000 budget) inevitably made public-sector reforms the dominant issues. Most significant was the sale of state-owned enterprises in 2001.

For the preceding two years, the Morauta government and the Privatization Commission have had to contend with the results of years of rampant corruption and mismanagement by political appointees, which by 2001had virtually destroyed the independence and decimated the capital of most of the state-owned enterprises. Because the release of further World Bank loans was premised on the privatization of the state bank, the Papua New Guinea Banking Corporation (PNGBC), it had to write off bad debts amounting to K45 million in order to attract potential buyers and struggled with nonperforming loans in its portfolio. The previous year had seen the state bank incurring a declared operating loss of K31 million when it spent K114 for every K100 earned. Other state-owned enterprises were all technically insolvent. The Electricity Commission was over K400 million in debt, while Air Niugini had incurred operating losses of K42 million in 1998 and K36 million in 1999 (National,26 July 2001). Post PNG, which is responsible for mail delivery, owed creditors some K25 million and was subsequently placed under liquidation.

In response to trade union opposition tothe privatization ofPNGBanking Corporation and an anti-land mobilization movement comprising university students and socialist nongovernment organizations, Prime Minister Morauta challenged his critics to choose between "service" and "ownership" and provide tangible alternatives to privatization.Theprime minister lamented, "We will try and explain but I can't go on explaining until the nation is dead" (National,18 July 2001). [End Page 456] A two-day protest in July against privatization and land reform by students and unsuspecting squatter settlers, who were mobilized by socialist nongovernment organizations, resulted in the death of four University of Papua New Guinea students when live bullets were fired on the protesters by police riot squads flown in from the Highlands region. The confrontation resulted from a police attempt to break up a sit-in by protesters in the Waigani government area.

Elsewhere, in the superannuation industry—where political appointees flexed their muscles on the boards—the carnage of corruption was also visibly clear. A commission of inquiry looked into the mismanagement of the National Provident Fund (NPF) that resulted in a 15 percent write-down of private-sector workers' funds; they learned that the former NPF chairman, Jimmy Maladina, who had since fled together with his family to Queensland, Australia, had decimated the fund of almostK8 million. Jimmy Maladina was appointed to theNPF board by the former government of Bill Skate...


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