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Many Pacific Island Countries Hardest Hit, Economist Says

2019-20 Australian aid budget: Pacific at a glance

According to an economist, many of the Pacific Island countries that rely much on tourism such as Vanuatu and Fiji have been hit hard by the pandemic.

Institute of National Affairs Executive Director Paul Barker said the pandemic had caused PNG a major drop in commodity prices such as gas and copper, adding that the government had been “in a severe budgetary squeeze even before Covid-19 hit, after years of major budget deficits, relatively weak expenditure control and a growing level of debt and debt servicing costs”.

He responded to a report that said that Australia’s biggest financial aid was still PNG - with AU$596 million (K1,495mil).

He said, “The global pandemic has impacted the global community in direct and indirect ways, with the direct health effects and the economic results from fall in demand, lower commodity prices and government-imposed restrictions on travel and trade. Governments and international institutions around the world have to be innovative to respond to an almost global economic crisis, with some countries having been much harder hit than others, to date. Australia has long had aspirations as a player on the global stage, particularly since the days of foreign minister (Gareth) Evans. With AusAID, they provided some valuable contributions across the developing world.”

He added, “But as their aid became more strategic and absorbed into foreign policy objectives, and as more international interest started focussing on the Pacific, invariably Australia, as only a medium level economic power, recognised its limitations and need to focus, unless it was going to increase overall development assistance, (which would also have both a humanitarian and strategic value). Considering the current Australian government didn’t gain office on the back of enlarging the overall aid programme, clearly it was logical to focus its efforts.PNG and some of its neighbouring economies are badly hurting.”

He said that in PNG and the Pacific, Australian assistance can make an essential difference while safeguarding its own doorstep, in a way, or extent, that it really cannot achieve in other parts of the world, even though some of them may be really desperate, with years of conflict and need for humanitarian assistance.

He said, “It’s what the funding is earmarked for, and how those Pacific Island nations utilise and account for the support (both to their own citizens and the donor) that really matters, whether it will have a lasting impact or be just some stop-gap intervention. PNG citizens will judge the assistance on its utility, how it engages and impacts on the ground and withstands the test of time, rather than on monuments to prevailing leaders, that fail to address the underlying concerns.”

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