Barker: Resource Projects Likely To Be On Hold
All planned resource projects are likely to be on hold due to the amendments of the Mining and Oil and Gas Acts.
Institute of National Affairs Paul Barker said this imposes a major and unexpected further blow to PNG’s export earnings and government revenue, at a time when the economy has already been hit with the impacts of Covid-19, and is already saddled with high and growing debt, and debt servicing costs.
Mr Barker said while seeking a better deal from the resource sector for PNG with more timely benefits for the State, provinces and landowners the world is out for investment capital, both from domestic and external sources.
“With Covid-19 it’s become a whole lot harder, with global capital withdrawing to safer havens, notably developed economies, and safer investments and markets.
PNG has been able to secure very concessional funding from the IMF and World Bank, under special Covid-19 support arrangements,” he said.
“But, with the shortfall of revenue, major demands on government expenditure to sustain budget commitments, salaries, and support the economy, business and employment during the severe downturn, the State has been pushed into a tight situation.”
Mr Barker said the government has been able to borrow from the domestic market using Covid-19 bonds, and has undertaken some quantitative easing (effectively printing money), which it can do, as other governments do, discreetly, but there are firm limits to borrowing, unless early and sustained revenue is assured with wise policies pursued to restore and build up the economy, manage fiscal operations and debt levels.
“The Government will be hard-pressed to boost revenue with the economy and business activity substantially restrained by Covid-19 for the foreseeable future.
Now is the time to apply favourable business and investment policies and measures to encourage and sustain business, jobs and enable an early recovery,” he said.
“That requires both domestic and Foreign Director Investment however, major new resource projects are likely to remain on hold, or even be shelved, while global market conditions show little sign of improving and while unrealistic investment conditions are imposed for the resource sector investors,” he added.