SAMUEL ROTH | Foreign Affairs Commentary
THE UNITED STATES GOES TO THE POLLS in November when President Obama’s leadership will be challenged by Republican Mitt Romney. Will the non-white president survive his second term?
What stands out in every American’s mind is the economy, the pivotal issue in this year’s election. Should he lose this election in a multiracial society, Obama’s only legacy may be that he was the first black president.
The US federal government yesterday bought debt and pumped in more money to boost the economy. And this week the Obama administration did well with positive opinion poll results. But there is weak growth in manufacturing and jobs’ growth missed expectations.
In Papua New Guinea, the K500 million budget deficit in the O’Neill-Dion government gives the new prime minister a taste of time. A good number of people have commented critically about why a deficit of that magnitude. Some have blamed it on commodity prices, while others on over-spending before the election by the O’Neill-Namah government.
The reason for pointing this out is not because we have a deficit to worry about but we are amazed that the PM is looking for a K6 billion loan from the Exim Bank of China. Is this loan a solution to patch up the deficit or is it to honour commitments to all the ground-breaking ceremonies and promises that the government has made over the recent months?
No loan is free, as the saying goes, but I like this quote from one of my favourite Hollywood actors, Chris Tucker, in one of his movies: “You loan your friend money. You see them again, they don't say nothin' 'bout the money. 'Hi, how ya doin'? How's ya mama doing?' Man, how's my money doin'?”
This actor reminds me of the tough times PNG went through juggling privatisation, land mobilisation, the 2001 UPNG protest deaths, and all the crap about the 1989 World Bank/IMF loans that drive third world countries like ours crazy.
Our debt is said to be around the K14.6 billion mark, which is 45% of GDP, and that is phenomenal.
One could imagine how stressful it will be to repay such a hefty debt. We are paying about K440 million in interest every year. Fortunately we have 7-8% annual economic growth. Do we have other workable solutions to meeting the deficit?
India this week raised its fuel prices by 14% to meet its budget deficit of $34 billion. India is the third-largest economy in Asia and many people fear this policy could hurt overall economic growth in India, which is already struggling with slow growth, inflation and currency weakness.
How many Papua New Guineans would accept such a sudden fuel price hike? I guess none. Then the question, where do we get the money to meet the K500 million deficit?
Instead, Dr Mohammad initiated a series of bold infrastructure projects: the Bakun electricity dam, the soaring Petro Towers and others that remain the cornerstones to Malaysia’s advance today. Mohammad improved the economy much faster than any other Asian country and rescued it.
He was Asia’s economic and political mastermind who set Malaysia on track for progress. Now Malaysia is considered as a member of the NIC (newly industrialized countries) – a step PNG can only dream about.
Some countries, like Malaysia, are cautious when it comes to loans or raising debt. They just tell IMF or Exim Bank, “Go to hell with your loans and conditions”.
Others, like the US and PNG, which have extreme internal disparities, seek more loans and become indebted. The key commonality between the US and PNG is that both are on the creditor’s list in Beijing’s Exim Bank. The US owes China $1.17 trillion and PNG now intends to add to its own mushrooming debt.
It boils down to rationality and pursuing the national interest. Sustained growth is a requirement to produce change on the ground.
Will the O’Neill-Dion government manage its debt without the need to borrowing more from international financial institutions and banks? No Papua New Guinean in this hype-filled Independence Week would want to feel indebted and “owned” or even “tamed” by foreign lenders.
Have we run out of ideas on economic and fiscal management? We should close parliament after the Independence celebrations and let the NEC attend a short course on the above. I will put my hands up to run the short course.
Happy Independence Day!