The European Commissioner for Development and Humanitarian Aid says the EU will not provide budget support to Papua New Guinea because its financial management is a concern and corruption is a problem.
Poul Nielson has just left PNG after a two day stay in Port Moresby.
The Post Courier newspaper reports that Mr Nielson says the situation doesn't allow for budget support, but he says the EU wants to move into doing sector program-based support.
Mr Nielson says the handling of money is not really good enough for PNG to qualify for budget support.
He says one challenge is to get to a situation where the public adminstration is more predictable and has more quality to it.
The EU has spent 442-million US dollars in PNG since 1978 and already has over 114-million dollars set aside for the country between now and 2007.