Is the 100 Days – 25 Point Plan Practical and Achievable ?

By Francis Hualupmomi



It appears that the government has admitted that there has to be a macroeconomic discipline in rescuing the current economic situation. And it has put forward a 100-Days 25-Point Plan economic rescue package for the country based on the Alotau Accord II. But is this package realistic and achievable? Therefore, this article seeks to respond to this question.
The Current Economic Situation

Source: ADB 2017 Outlook https://www.adb.org/countries/papua-new-guinea/economy



According to the Asian Development Bank Economic Outlook (2017), the PNG economy has slowed down to 2.0 percent compared to the last four years (see the figure above). But it is predicted to pick up again at 2.5 percent by 2017 driven by mining and agriculture. The slowdown in the economy has been attributed to low commodity prices. This has increased inflation and unemployment, decreased foreign reserves, and affected the national budget.

Macroeconomic Landscape
It appears that the economic approach undertaken by the government over the last four has been one of an Expansionary. At the fiscal policy level, it has been driving the economy with high spending and borrowing at the backdrop of a decade long economic growth. The rationale is simple – utilise the surplus to expand the economy through infrastructure development which will, in turn, stimulate the economy. As a result of this approach, the economy has experienced an infrastructure boom in the economy as has been so far.
At the monetary level, it has been responding to the fiscal policy to ensure that the economy remains stabilised. It is important to note that in a country like PNG, monetary policy approach responds to fiscal policy to ensure stability. In so doing, it controls exchange rate and interest rates which tend to influence inflationary (inflation) behaviour.
Unfortunately, this macroeconomic policy has been affected by an unfavourable condition. There are two related factors, apart from others, that affect this behaviour. First, is that our commodities have been hit hard by low prices in the global market, which we have no control over. As a result of this price fluctuation, the revenue sources have been affected to sustain the fiscal capacity (budget). Because PNG is a resource-dependent economy that relies heavily on mineral and petroleum sectors, a price fluctuation in the global market will directly affect the economy in terms of growth and development. That is one of the reasons why the budget has been cut in certain social and economic sectors.
The second factor is that while the expansionary approach has been good it has not been managed at a sustainable level. What it means is that as the commodity prices slowly began to pick up again there has been a steady increase in the spending and borrowing. The reason is that there is an expectation that price will pick up again as in normal business cycle and sustain the expansionary approach. The downside of it is that it is quite difficult to predict the price fluctuation due to the complex interaction of market forces. As a result of this fiscal behaviour, the budget spending and borrowing has increased the deficit. However, the budget deficit can be improved and incrementally restored to normalcy through a sustainable macroeconomic policy package. Therefore, the next part will discuss this.

The Viability of the New Macroeconomic Rescue Package
The new Deputy Prime Minister and Treasurer, Hon Charles Able, has realised the downside of the expansionary macroeconomic approach. And he has proposed a 100-Days economic package to rescue the economy from further sinking. In essence, this is a 25-Point Plan which has been widely consulted with the private sector and led by some of the senior ministers and economic advisors. While this package may seem unrealistic to some critical commentators, in my view, it is a workable and achievable one.
The 100-Days 25-Point Plan intervention is based on these key strategic economic priority areas:


• Maintain Fiscal Discipline and Boost Foreign Exchange; Growing Our Revenues;
• Strengthening Our Economic Base;
• Improving Our Governance Record, and;
• Acting Strategically
.
First, maintaining fiscal discipline and boost foreign through the growing of revenues. Given the issue of the fiscal problem, practically maintaining a fiscal discipline in a prudent manner will help boost the foreign exchange in many ways. That means controlling and spending behaviour as compared to previous years. And this must be balanced with growing revenues through multiple sources. Incoming revenues must be prudently managed in a sustainable way. What is collected should be spent on strategic priority areas that can bring in higher returns.
In addition, the tax cut will be a balanced strategy. This is because no new taxes will be imposed on ordinary people despite declining revenues. However, this can be recovered through those who avoid or and evade tax. The country has been missing out on the billion dollar extractive industries through tax. For instance, a lot of companies in the mining, petroleum and logging industries have been avoiding or exempted from tax. As result of this, billions of Kina have been going out of the country. These lost revenues could be recovered and help support the budget.
Secondly, strengthening of the economic base is an innovative plan to invest in economic areas that have been ignored. This implies that the economic base must be diversified to boost the economy by way of revenues sources and invested in a lot of baskets to cushion economic surprises. Apparently, the focus on agriculture is pragmatic going forward. It has been a neglected billion dollar sector. Therefore, it is hoped that this will incrementally support and sustain the budget. 
Moreover, while the plan sounds practical, the governance aspect of it is fundamentally critical. The government has been widely criticised by the public for governance issues. And this approach is a noble plan to improve its credibility and international standing. In so doing, it will help its approach in prudently governing and managing the economy. Because investor confidence attracts investment and helps build the economy. Political governance is the strategic driver of economic growth and development at this time and in the long run.
Finally, these plans must be pursued in a strategic way. Every decision requires calculated available options to maximise optimal outcome. The government has chosen the best strategy therefore, it is Directionally Correct.



In conclusion, the economy has been affected due to the changing economic conditions and governing approach. And this has been evident in the current economic situation the country is facing. But this can be arrested through a sustainable macroeconomic approach. Therefore, the 100-days 25-point plan package is a practical one and needs to be incrementally governed and managed in a strategic way.

Francis Hualupmomi is a PhD Student in Public Policy in the School of Government, Victoria University of Wellington. He is a Political Scientist in the area of political economy of energy security, geopolitics of resources, international security, and strategic policy. Views expressed here are his own. francishualupmomi270@gmail.com 

Advertisements

Pangu to create Coffee Ministry 

BY FRANKIY KAPIN
The Pangu party will create a coffee ministry if it forms government after the 2017 national election.
Pangu party leader and Bulolo MP Sam Basil announced on this on Wednesday in the Kabwum district, Morobe province.

Pangu plans to create a coffee ministry when it forms Government

The deputy opposition leader was in the district to endorse the nomination of Haring Qoureka,the Pangu party candidate contesting the Kabwum seat left vacant by Bob Dadae who is now the tenth Governor General of Papua New Guinea.
Mr. Basil said apart from the existing agriculture ministry in the national government there will also be the creation of the coffee portfolio.
He said the current government has allocated K700 000 to agriculture but a Pangu-led government will see the creation of a coffee ministry allocated K1 billion.
He said from a total of K2 billion budgeted annually for agriculture, K1 billion will go to the coffee ministry.
Basil said for the past nine years serving in the government and opposition he has been able to deliver services as expected and now the manifestation of his leadership in the Bulolo district serves as the basis for endorsing ten candidates to contest the ten seats in the Morobe province.

Trukai expanding investment in local rice production

By: Jonny Andrews

Competition is by far the greatest phenomenon that has happened to mankind!

Decades and decades of Rice Monopoly is about to go up in smoke when the Government puts in-place plans for Naima to grow rice in Papua New Guinea. What does Trukai do in this instance? Do they fight the Government? Do they cry wolf? They do what is the most logical thing to do and what the Government hoped they do.

Trukai now has expand their plans! They go into a 500-hectare rice plantation and want to invest more locally!

This the beauty of competition…..at the end of the day, you see investment coming into Agriculture sector and into Papua New Guinea. We need more local invest, more local employment and more of food security.

Well done Trukai!

——————————————————-

BY: Loop Business —14:07, February 22, 2017

This week Trukai Industries Limited is purchasing agricultural equipment for the establishment of the largest rice crop in PNG’s recent history.

 

With the cooperation of the Chingwam Rice Growers Cooperative, Trukai will be establishing a 500-hectare rice plantation near Rangiampum initially for a rain fed crop to be established in 2017.

This is in addition to the existing 80-hectare site already producing rice for the cooperative, under the management of Trukai’s rice development team.

This site will be progressively expanded possibly up to 1,500-2,000 hectares over a number of seasons, although this will be subject to relevant agreements and climatic and soil evaluations.

22pr_trukai_rice_production
Trukai Rice Field in Markham

This exciting step forward in domestic rice production comes ahead of further developments Trukai management are hoping to discuss with government, following submissions for large scale irrigated rice growing in a number of areas across PNG.

Proposals have been submitted to the Departments of Agriculture and Livestock, and the Department of Trade, Commerce and Investment, although responses from government have yet to be forthcoming.

Trukai Industries Limited’s CEO, Greg Worthington-Eyre said in a statement, “Trukai stands ready to assist the government of PNG in its domestic rice development, and this project with the Chingwam Cooperative is a major step forward in laying the groundwork for other projects.

Whilst we wait for the government to respond to our proposals, we are simply getting on with it, and are very excited about building a strong local rice industry.”

Worthington-Eyre went on to add, “The establishment of the large scale site at Rangiampum will be supplemented with a further 100-hectare site closer to our Erap facility, where our rice seed generation plantation is being redeveloped.”

In April and May this year, Trukai will be installing a hulling mill in Lae to facilitate the processing of locally grown rice, and this represents a significant investment and commitment for Trukai.

trukai01
Workers checking the quality of rice

The first rice to be processed at this mill will be the rice from the Chingwam Cooperative.

Worthington-Eyre concluded, “The rice growing at Rangiampum is expected to be harvested in April this year, and will be transported to Lae for milling and blending.

“Our rice, PNG’s favourite brand since 1970 (before federation) will contain rice grown in PNG.

“This is great news as not only will we be including locally grown rice in our products, food security gets a major boost as well and, more importantly, this puts money into the rural sector for use of land that would normally remain idle.”

http://www.looppng.com/business/trukai-expanding-investment-local-rice-production-52957

HE WHO PLANTS FIRST, REAPS EARLY!

By: Andrew Arthur

The Agriculture Sector is about to get a Major Shakeup!

As the campaigning of forming the next Government heats up. Each Political party would want to be seen as the Government for the people and wants to connect to the people. Major policy pushed would be a returned to the Agriculture Sector …

First to fire their Policy is Pangu Party with a funding of K2billion promised for Agriculture! K1 billion to be spent on Coffee and Cocoa as they believe would earn more. The other K1 billion is to be spread across other agriculture sectors.

The reality is…according to FAO, coffee is listed number 22 of the most important and high earning crop and cocoa is not listed in the top 52 at all!

hydroponics-solves-food-security-issue
Hydroponic solves food security issues

Pangu would be guilty of making the same mistake they did in the early 1980’s………..

What this country needs is to invest into the right product…..look at the list attached, pick the Top 30 and invest into that according to priority.

Food Security is what is Needed the Most! Invest into Food Security as oppose to investing into Coffee and Cocoa!

1. Rice
2. Cattle Farming
3. Poultry Farming
4. Piggery
5. Tomatoes, beans, onions etc…

This is where the people in Papua New Guinea want us to invest in….this is what put food on the table

Invest in Food Security!

——————————————————–
Pangu Pati will invest into AGRICULTURE when in Government.

Today PNG’s Economy depends on 80% Non-renewal resources & 20% Agriculture export earnings, it was the other way around when we took independence in 1975.

Pangu Pati plans to invest at least K2b into agriculture with a billion directory into Coffee & Cocoa expansion and extension programs.

Coffee to become MINISTRY of COFFEE while cocoa to be the same as both are currently earning K500m into our economy from export earnings.

The investment into the two leading cash crops will see a 15 to 20 years timeline to increase production to earn over K2b plus into our economy.

Expansion and extension programs will see an annual investment K200m each into coffee and cocoa programs.

Agricuiture Ministry will be the leading ministry once again under Pangu Pati with coffee and cocoa to independently branch out into ministries of their own.

The rural population and business groups will participate more into agricuiture to feed PNG the world.
Agricuiture is sustainable and safe investment that PNG must quickly invest into to reduce our reliance on non-renewals.
The National Pg 7 07/02/17

most-valuable-crop-livestock
Most valuable crops and livestock according to FAO
16473502_10155141976821614_9182958399000375870_n
Pangu wants to invest in Coffee and Cocoa with K1 billion