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Thursday, 21 September


Foreign exchange restrictions in PNG: costs and remedies "IndyWatch Feed"

Three years after their introduction in mid-2014, foreign exchange (FX) restrictions continue to be in place as at July 2017. Unofficial ballpark estimates of excess demand range between US$300 million to 1 billion.

In a 2017 Business Advantage survey of CEOs, 60% nominated access to foreign exchange as the major obstacle, more than double any other challenge. Interviews with businesses reveal that they have to spend significantly more time on finding FX and managing the credit situation with their overseas suppliers. This increases their administrative costs, which are likely passed on to the consumers. In addition, firms are piling up dollarized debt when there is depreciating pressure on the kina.

The excess demand for foreign currency has led to a substantial delay in the processing time of FX-orders, which is now reported to be between 6 and 16 weeks. The processing duration is a function of fluctuating FX availability and the priority of an order, which the Bank of PNG (BPNG) sets at its own discretion. The general pattern is that imports of basic food (especially rice) and fuel are favoured over other consumer goods, or raw materials for construction. Dividends and repatriation are near the bottom of BPNGs priority list, and the majority of such orders do not get processed at all.

To grasp the severity of the situation, and the extent of import-compression, consider the share of imports to GDP. From 1980, the value of imports tends to hover around 50 per cent of GDP, but over the past two years imports have collapsed to 15 per cent of GDP, with the start of the sharp fall coinciding with the imposition of the FX-restrictions in 2014. This decline in imports is far greater than the one experienced in 1994 when PNG underwent a currency crisis. The argument could be made that the decrease in imports could be overstated due to the LNG project, which provided a substantial boost to GDP, with no commensurate increase in the demand for imports. However, imports as a share of non-resource GDP (that is, GDP excluding the mining and oil/gas sectors) have also collapsed to 23 per cent.

Imports as a percentage of GDP and non-resource GDP



Fortnightly links: Rohingya crisis, PNG independence, blockchain technology and more "IndyWatch Feed"

A new report from ODI traces the history and impact of the results agenda within the UKs Department for International Development.

To mark PNG independence day Paul Flanagan has a blog post tracking the countrys post-independence development trends.

With the Rohingya crisis worsening, here is an explainer on the situation (including photos).

Cuts to funding global health will have devastating effects, according to a Gates Foundation report.

In a strong message to world leaders at the United Nations General Assembly this week, Oxfam welcomed refugees into President Trumps childhood home.

Blockchain technology, a shared digital ledger system, could transform international aid. The United Nations World Food Program is using it to bring efficiency to refugee camps, saving 98 per cent of money-management costs, as this article explains.

The post Fortnightly links: Rohingya crisis, PNG independence, blockchain technology and more appeared first on Devpolicy Blog from the Development Policy Centre.




The press release from the latest mission of the worlds International Monetary Fund (IMF) see here highlights the difficult road ahead for PNG in dealing with recent years of bad luck and economic mismanagement.


On the fiscal front, the IMF considers that the government will fail in the Supplementary Budget to bring the 2017 budget deficit back to the target of 2.5% of GDP. Rather, it estimates the deficit will be a little over 3% so a gap of some K370 million relative to the 100-day target.

The goal to reduce the debt to GDP ratio back to the legislated level of 30% as part of the 2017 Supplementary Budget is also recognized as infeasible. Instead, the suggestion is a medium-term objective of moving to a balanced budget by 2020 (and GDP growth will work to reduce the ratio).

So the first two targets in new Treasurer Abels 100-day plan are likely to fail.

Expected growth is also wound back from the 2.7% estimate in 2017 down to 2.4%.

Positive processes

Despite these negatives, my overall reaction to the IMF report is a very positive one.

First, as the government would have had to approve the IMF post-mission press release, it indicates a very different attitude than the attempts to suppress the 2016 report see here and here.  PNGs behavior ten months ago placed PNG towards the bottom of all countries and ensured it had little chance of issuing a Sovereign Bond. The release is a very positive step towards transparency.

Second, the IMF Article IV report comes out at a very similar time to another report from an IMF tax reform mission. PNG appears to be engaging positively with the international community.

Third, indications are that the consultation process in these missions was positive and wide-ranging. There is feedback that Treasurer Abel also worked to ensure a very broad-based approach towards the preparation of the 100-day plan. Broad and constructive engagement makes for better...

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Wednesday, 20 September


Non-government aid comparing effectiveness "IndyWatch Feed"

How can private citizens who want to contribute to international humanitarian or development efforts obtain a guide to which international nongovernment organisations (INGOs) are most effective in what they do?

There is a wide range of activities which INGOs undertake as contributions to humanitarian relief and development to give a few examples, distributing relief supplies after natural disasters, providing medical services to victims of armed conflict, encouraging community participation in governance and infrastructure, promoting rural livelihoods, lobbying governments, or trying to change attitudes on gender. This variety makes it difficult to form a meaningful system for measuring IMGOs effectiveness for the purpose of comparison.

Measurements and comparisons make sense only when applied to the effectiveness of limited subsets of INGOs which have common objectives and timeframes for showing results, or else to organisational characteristics which are at one remove from activities and results. This choice is reflected in the sources Ive found which offer information about INGOs to prospective donors.

From Australian sources, there is limited information about INGOs in comparative terms. The system of accreditation of NGOs by the Department of Foreign Affairs and Trade provides publicly a three-level categorisation of INGOs, in terms of attributes which indicate some likelihood of effectiveness. There is one Australian-based website, Effective Altruism Australia, which offers and explains a list of several recommended INGOs; these recommendations are sourced from United States (US) organisations mentioned below. There are two other Australian-based websites the Australian Charities and Non-profits Commission and ChangePath providing information about large arrays of INGOs operating in Australia, but this information has limited relevance to their effectiveness.

When I reconnoitred United Kingdom (UK) sources, two features stood out. There is a publicly visible, collaborative effort by development NGOs, through the networks BOND and NIDOS, to keep improving the evaluation of their activities. Several of the big INGOs based in the UK (or straddling the UK and the US) publish accountability reports which are detailed, informative accounts of how they assess their own effectiveness and keep trying to improve it....

Tuesday, 19 September


Rebuilding education and peace in Mindanao "IndyWatch Feed"

Ella, not her real name, was allegedly caught as an amazon or woman fighter for the MNLF [Moro National Liberation Front] during the Zamboanga siege in September 2013. Her family is poor and she supported herself through vocational school by selling in the market. She was forced to leave her studies to help raise funds for a big amount of dowry that her brother needs to pay for his brides family. To prevent rido or clan feuding, the brother had to get married even if they were too young to settle down. Ella and her younger siblings stopped going to school to help in paying for the familys debts and in earning a living for the family.

The education sector in the Autonomous Region of Muslim Mindanao (ARMM) exists within a complex and multi-layered social, political, economic and conflict environment. There are an estimated more than 10,000 displaced children from the recent Marawi conflict who will be unable to attend school this year. Both government troops and local residents have reported that child soldiers are fighting for the Maute/ISIS group in Marawi City. There is genuine fear that out-of-school children are vulnerable and at risk of being recruited by extremist groups. According to a joint DFAT and World Bank study in 2014, the education deficit in ARMM is so serious that only one in ten students will complete high school.

Ellas story, and what has happened in Marawi, illustrate how education poverty perpetuates conflict and the poverty trap in Mindanao. Thus, education is a vital component of peacebuilding in Mindanao. Our own research, based on a Justice User Survey with 540 respondents administered over six areas in ARMM in June-July 2016, confirms that next to health services, education is the Philippine government service most desired by people in ARMM. Peace and security, employment, and basic utilities are also urgently needed in the region.

Yet, past peace settlement efforts have glossed over this critical dimension of addressing the cycle of conflict and poverty. Most initiatives were geared towards showcasing immediate and short-term peace dividends rather than cultivating gradual and long-term solutions to structural drivers of conflict. The poor state of education in the ARMM reflects a long history of funding...

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