Transcript
PAUL FLANAGAN: i think it is a very positive message coming out of it of, especially the new Treasurer, Charles Abel, an indication that he is willing to be more transparent in the way he actually formulates economic policy and in the case of the IMF it really is the international umpire that can come in and give a more unbiased view as to how economies are going than governments often can. So I think it is a very positive development and a long way from their attempts to suppress the IMF report we saw last year, especially around Christmas time.
DON WISEMAN: There impression of the economy - they are definitely advocating some very tough moves by the government aren't they?
PF: Well I think most people, who look at the PNG economy currently, would say that the PNG economy is in crisis in quite a few ways. It has a budget crisis, it has cash shortfalls, foreign exchange is having a sever impact on businesses, growth is low. These are pretty clear indications that the PNG economy is going through pretty tough times at the moment and so it is not surprising that you need some tough medicine to try and get you back from the difficulties the country is in, especially when those difficulties in part have been self imposed as well as the bad luck in the fall in commodity prices.
DW: Well it is talking about reducing the size of the public service - it's been tried before. And also cutting back the district service improvement programme, and again that is going to be politically delicate.
PF: Yes that's right both of those areas going to be difficult. So we know that the Treasurer has instituted a very good consultation arrangement, going and talking to even opposition governors, to try and see if they would be agreeable to sort of cutting these electoral funds that the have at both provincial and at local or district level. So it is terrific that he has come and started that consultation process but I guess highlighting how difficult that will be is the Prime Minister issued a release to say there would be no cuts in those programmes, so this is shaping to be an interesting, I guess in part battle, or policy discussion that is occurring between the Treasurer and Prime Minister, and it highlights how hard it will be to get the deficit back to the sort of levels required, especially after the blow-outs we saw revealed during the election campaign - huge blow-outs in the size of the deficit.
DW: And in that press release from the Prime Minister he also talked about how the supplementary budget coming out is going to balance the budget, but that is not going to happen according to the IMF.
PF: It is not going to happen according to the IMF, it was not even in the aim the 110 Day plan that was released. That was only to go back to a deficit of two and a half percent. The IMF thought that would be unlikely and thought it would be a little over 3 percent. So some of these numbers that we see that are coming out on PNG from different sources, sometimes from the Prime Minister's Office, sometimes, occasionally from the Bank of PNG or Treasury - these are the numbers that are sort of clearly impossible. They are more aspirational. They actually hurt confidence. They undermine international confidence that the government has got things under control and that, indeed, they have a medium term adjustment path to try and fix the PNG economy.