Developments in Papua New Guinea - 1997

Papua New Guinea has had a very eventful year in 1997. It has had a constitutional crisis involving the military, an election and is now beset by a severe drought. But its macroeconomic indicators look good, with low inflation, adequate foreign reserves, moderately low interest rates and a liquid banking system. The one sticking point has been employment, which has not increased significantly for the last ten years. Apart from its economic record Papua New Guinea's social indicators rate poorly on the international scale and this will also impact future growth. Papua New Guinea's extraordinary mineral and petroleum wealth provides a cushion which can be used to redirect resources away from wasteful expenditure toward productive activities. But it will require strong and determined political leadership to achieve this.