13 May 2004

PNG Prime Minister criticises financial institutions

3:16 pm on 13 May 2004

Papua New Guinea's Prime Minister has criticised International Finance institutions, particularly the World Bank and the Asian Development Bank, for the conditions they attach to their loans to PNG.

Sir Michael Somare made the attack on what he calls "stringent conditions" in parliament yesterday, saying the two institutions have not delivered to PNG expectations despite the country meeting all their mandatory requirements.

The ADB has withheld US$35 million in a loan tranche since 2002 due to perceived governance problems in the fisheries sector.

And the World Bank has not delivered its commitment in rehabilitating the Highlands Highway due to problems with the Forestry and Conservatory Project.

Sir Michael says the government has moved mountains to implement the conditions of the loan agreement relating to the forestry sector, yet the bank has not released the loan funds.

He says the action of the World Bank and the ADB in placing loan conditions unduly inhibit PNG's economic management and undermine national interests.

Sir Michael says the institutions have a very poor record of success, especially in many African and Latin American countries.