Violent crime and corruption are endemic in Papua New Guinea, reliable electricity is rare, and population centres are isolated (AFP Photo/ARIS MESSINIS) |
Papua New Guinea's new prime minister has an ambitious -- cynics would say far-fetched -- objective of turning one of the world's poorest countries into the "richest black nation" on earth in just a decade.
If national
economies were like football teams, then Papua New Guinea would be near the
bottom of the table struggling to avoid a relegation dogfight.
Violent
crime and corruption are endemic, reliable electricity is rare, and population
centres sit like isolated city-states, surrounded by trackless jungle and
mountain ridges that soar into the equatorial sky.
As rich as
Papua New Guinea is in culture, language and beauty, it is the 153rd most
developed country in the world out of 189, according to the United Nations --
doing slightly better than Syria, marginally worse than Myanmar.
New prime
minister James Marape wants to change that. He has promised that within ten
years his compatriots will live in "the richest black Christian
nation" in the world.
That is not
going to be easy. The current titleholder is the highly industrialised economy
of Trinidad and Tobago, where the average resident earns around 833% more than
Papua New Guinea.
Papua New Guinea is rich in culture, language and beauty, but is way down the UN development rankings (AFP Photo/SAEED KHAN) |
If the
British territory of Bermuda were also included in the rankings, the task would
be even more daunting.
Papua New
Guinea's economy would have to grow at a world-beating rate of around 30
percent per year, every year for the next ten years just to catch up.
"PNG
has never experienced 30 per cent growth in the past; nor has any other country
for that matter, at least not for any sustained period of time," said
Maholopa Laveil, a lecturer in economics at the University of Papua New Guinea.
To reach
his lofty goal, Marape appears to be betting on a surge in gas revenues and
more of that cash staying in the country.
He has
hinted that he may look to renegotiate a massive liquefied natural gas (LNG)
contract with Total and ExxonMobil that would double national production to
better benefit the local economy.
He has also
promised to stop the export of unprocessed hardwoods and tackle corruption.
But the
strategy comes with risks.
New prime minister James Marape has hinted he may look to renegotiate a massive LNG contract with Total and ExxonMobil (AFP Photo/SAEED KHAN) |
Dashed expectations
The World
Bank has warned that even before a second LNG project comes online, the economy
has "become increasingly concentrated in petroleum and gas-related
activities".
That, the
bank warned, raises Papua New Guinea's vulnerability to the vagaries of international
energy markets and natural disasters -- like the 7.5 magnitude quake that froze
production and stalled the economy in 2018.
Even the
country's existing PNG LNG project -- which started to flow in 2014 -- has
failed to live up to expectations.
It required
a controversial public loan worth more than a billion Australian dollars ($700
million) and helped national debt spike.
The project
was forecast to increase GDP by over 97 percent, but according to Paul Flanagan
-- a former Australian government official who runs the influential PNG
Economics blog -- the increase has been closer to six percent.
The World
Bank has warned PNG's vulnerability to earthquakes is increasing along
with its
reliance on petrol and gas (AFP Photo/Melvin LEVONGO)
|
"Overall,
the PNG LNG project massively over-promised and then failed to deliver,"
one of his recent blog posts read. "For household disposable income, the
prediction was an 84 percent improvement. The outcome is a decline of 9
percent."
Flanagan
believes that regardless of any energy boom, Marape -- a former finance
minister -- will need to undertake difficult currency and trade reforms if the
country has any hope of growing sustainably.
"Time
will tell if the new government will tackle such difficult political economy
challenges, challenges that must be addressed to make PNG a much richer black
Christian nation," he said.
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