Read the complete article at the PNG Economics website
IN an extraordinary step, and for the first time in Papua New Guinea’s 41 years of independence, its government has refused to release the International Monetary Fund’s assessment of the economy.
An IMF mission visited PNG mid-2016 and the O'Neill-Dion government is clearly embarrassed by its economic performance over the year.
Its reticence moves PNG to the bottom two percent of world governments which are unwilling to be transparent about the state of their economy.
The IMF’s final press release before Christmas indicated that “the [PNG] authorities need more time to consider the publication of the staff report and the related press release.”
This appears to be polite diplomatic-speak to suggest the PNG government does not want to release the information.
There has been more than enough time for the IMF’s views to be considered and for the PNG government to respond.
In the absence of any explanation for this unprecedented delay, an action so out of step with nearly all other countries, it is impossible to conclude other than that the PNG government disagrees with the IMF's assessment.
But, rather than engaging in open public debate, it simply doesn't want alternative views published at this time, to an emerging pattern of reduced transparency from the O'Neill-Dion government.
Why does this matter?
Firstly, PNG has been actively seeking international financing to cover its foreign exchange and budget funding shortfalls following the largest budget deficits in its history. With this lack of transparency, the chances of obtaining a sovereign bond are effectively zero. International investors will be looking for adequate information from a trusted international source (the IMF) to assess the risks of investing in a PNG bond.
Second, such actions will also flow into assessments of PNG by other international lenders.
Third, international credit agencies will view this development with concern. The question becomes, “What are they trying to hide?”
Fourth, it will affect broader investor confidence in PNG. It is not just the quality and availability of the resource riches in PNG that attract investors – it is a broader set of issues including economic management and transparency. Hiding information will affect future economic growth possibilities.
Finally, and most importantly, the people of PNG have lost a key source of reasonably independent information for judging the performance of the O’Neill-Dion government.
During 2016 there have been growing doubts about the credibility of information provided by the PNG government. Relevant issues include: the Treasurer's confusion about the actual size of the economy; the severity of PNG's falling growth performance; the unfortunate retreat to printing money; serious credibility issues around budget revenues, expenditures and financing; the move to a fixed exchange rate and linked foreign exchange shortages; and what are increasingly seen as anti-growth policies.
If the O'Neill/Dion government is doing as well as it claims on such issues, it should have been in a position to welcome the IMF report.
I have been critical of many of the PNG government's numbers during 2016.
My articles have pointed to statistics lacking credibility, policy confusion and fraudulent practices in the latest budget.
The IMF report could have proven the PNG government was right and that I was wrong. Instead, the government has chosen the dishonourable path of suppressing information from a well-recognised international source.
In 2015, the only two IMF members that did not publish a press release with the Board’s assessments were Suriname and Dominica. Less than 12 months later, both countries were in IMF programs trying to sort out economic crises.
If there is a change of PNG’s government in mid-2017, it is likely that assistance will have to be sought from the IMF and other concessional sources of finance to help deal with PNG’s partially hidden economic mess.
If there is no change of government, and even with the boom of another few big resource projects, PNG is likely to continue down a slippery slope of poor economic outcomes for its people and declining transparency on economic management.
That the O’Neill-Dion Government felt the need to hide feedback from the IMF is a shameful way to start 2017.