3 Dec 2003

World Bank says it is not withholding funds despite claims by the PNG Prime Minister

4:58 pm on 3 December 2003

The World Bank denies it is withholding development assistance funding to Papua New Guinea, but says it is being more cautious about making loans.

This follows criticism directed at the World Bank and the Asian Development Bank by the Papua New Guinea Prime Minister, Sir Michael Somare.

Sir Michael has told Parliament PNG will end loan arrangements with overseas donor partners by March if promised funds are not released.

A World Bank spokesman, Peter Stephens, says he's not aware of any decision to withhold funds, but adds that two projects have met problems and one's suspended.

Mr Stephens says the World Bank is concerned to ensure that loan money is used more effectively than it has been in the past, and this may be behind frustration.

"It's troubling, you know, to see that so much money has been transferred and it hasn't always produced good, visible, sustainable outcomes for a society that has so much to offer. And if money transferred in such a fashion hasn't produced positive outcomes in the past, continuing to do it,or simply more of it in the same way, is unlikely to produce a better result now, so we are being more cautious and we have engaged in much more intensive discussions with the Government."

Peter Stephens, PNG regional communications manager for the World Bank.