Economist encourages PNG to seek IMF help

9:12 am on 2 March 2017

An Australian academic who has analysed the struggling Papua New Guinea economy says the Peter O'Neill Government should seek financial help from the International Monetary Fund.

Papua New Guinea, money, kina

Papua New Guinea currency Photo: RNZI

Economist Paul Flanagan said PNG should follow the route taken by Mongolia.

He said Mongolia's commodity driven economy was very similar to PNG's and it got into much the same difficulties when commodity prices slumped.

The IMF recently granted Mongolia hundreds of millions of dollars in low cost funding to help ease the financial constraints it's been operating under.

Mr Flanagan said the O'Neill Government should follow the same route.

"If PNG was able to get access to those funds it would be able to cushion the massive cutbacks they have imposed on the people of PNG in areas such as education and health, the incredible cutback in infrastructure spending which will also have long term growth impacts. So why the government isn't going for that one can only assume they don't want to take some of the medicine that is required."

An IMF report on the PNG economy last year found major discrepancies in the PNG Government's Budget details.

The international agency said economic growth would be 12.7 percent lower, that the economy was substantially smaller than the government claimed and debt levels much higher.

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