The World Bank is reportedly threatening to withdraw all financial support to Papua New Guinea if the government does not implement its controversial Forest Conservation Project.
The National newspaper says the World Bank has warned the National Forest Board not to meet to discuss fast-tracking new forest project approvals.
Government sources told the paper that the Forest Minister, Patrick Pruaitch, had asked the World Bank to justify the economic benefits of the conservation project which effectively placed a moratorium on the issue of any new cutting rights.
The minister is quoted as saying bank executives had failed to do this.
The PNG Government desperately needs overseas budget assistance and the paper says the World Bank conditions attached to its forest conservation project could cost thousands of jobs, the closure of many forestry projects and a huge drop in government revenues.