Australia's High Commissioner to Papua New Guinea has warned Port Moresby that the next five years will be crucial to its future.
At a conference in Port Moresby, the high commissioner, Nick Warner, said Canberra felt it essential that PNG face up to the sobering statistics of declining revenue and worsening social indicators.
Mr Warner said PNG was rated 122nd out of 162 countries in the 2001 ranking by the UN Development Programme.
He said 40 thousand children leave school each year and there is formal employment for only between five to seven thousand.
By 2020 school leavers will number 130 thousand.
Mr Warner also warned of the emerging HIV/Aids problem that was already heading towards African proportions.
He also said that in the next nine years four out of five of PNG's mines are expected to close.
Mr Warner said as in the past, Australia was ready to help PNG confront these problems, but he said there were no easy fixes and hard decisions would have to be taken in the 2003 budget and beyond.