Papua New Guinea - Economic situation and prospects

Report No. 2157-PNG Papua New Guinea: FiLe Economic Situation and Prospects The Main Report Agricultural Annex and Statistical Appendix December 29, 1978 East Asia and Pacific Regional Office FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency unit = kina (K) K 1 = US$1.4 US$1 = K 0.71 FISCAL YEAR July 1-June 30 through 1977 January 1-December 31 beginning 1978 TABLES zero or negligible - = not applicable n.a. = not available  FOR OFFICIAL USE ONLY This report is based on the findings of an economic mission which visited Papua New Guinea in April/May 1978. Its members were: Madhusudan Joshi (Chief of Mission), Alice Galenson, Ellen Schaengold and Ramanbhai Bhakta. A draft version of this report was discussed with the Government of Papua New Guinea in November 1978 and it has been revised in the light of those discussions. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   PAPUA NEW GUINEA: ECONOMIC SITUATION AND PROSPECTS TABLE OF CONTENTS Page No. COUNTRY DATA MAPS (4) SUMMARY AND CONCLUSIONS . . . . . . . . . . . . . . . . . i-vi I. ECONOMY IN TRANSITION . . . . . . . . . . . . . . 1 II. GROWTH AND STRUCTURAL CHANGE . . . . . . . . . . . . . . 2 III. DOMESTIC AND EXTERNAL RESOURCES . . . . . .. . . . 7 A. Public Finance . . . . . . . . . . . . . . . . . . . 7 B. Financial Intermediation . . . . . . . . . . . . . . 11 C. Balance of Payments . . . . . . . . 13 IV. EMERGING ISSUES: POLICIES AND PROSPECTS . . . . . . . . 17 A. Manpower Problems ... . . . . . . . .... ... . 17 B. Decentralization of the Government . . . . . . . . . 20 C. Planning for Development . . . . . . . . . . . . . . 23 D. Agricultural Development . . . . . . . . . . . . . . 26 E. Distribution of Growth Benefits . . . . . . . . . . . 36 V. PROSPECTS . . . . . . . . . . . . . . . . . . . . . . . . 38 ANNEX - AGRICULTURE STATISTICAL APPENDIX  I  Page 1 of 2 COUNTRY DATA PAPUA NEW GUINEA AREA POPULATION DENSITY 461,700 sq km 3.0 million (mid-1978) Rate of Growth: 2.6% (from 1966 to 1976) 6.5/sq km POPULATION CHARACTERISTICS (1977) HEALTH Crude Birth Rate (per 1,000) 45 Population per Physician (1974) 11,590 Crude Death Rate (per 1,000) 15 Population per Hospital Bed (1971) 150 Infant Mortality (per 1,000 live births) 160 EDUCATION ACCESS TO ELECTRICITY Adult Literacy Rate (1971) 31.0% % of Population - Urban 50% Primary School Enrollment (1975) 56.8% GNP PER CAPITA IN 1977 US$480 /a GROSS DOMESTIC PRODUCT IN FY77 /b ANNUAL RATE OF GROWTH (%,FY75 US$) (at current prices) US$ Million % FY67-72 FY72-77 FY77 GDP at Market Prices 1,514.5 100.0 6.5 4.2 0.9 Gross Domestic Investment 268.1 15.9 19.2 -8.5 17.0 Gross Domestic Saving 283.1 18.7 . 66.0 54.3 Current Account Balance 111.9 7.4 Exports of Goods, NFS 678.5 44.8 14.0 12.5 2.3 Imports of Goods, NFS 663.5 43.8 14.7 -1.2 15.8 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1972 Value Added /c Labor Force V. A. Per Worker US$ Million % '000 % US$ % of National Average Agriculture 258.7 40.1 158 48.8 1,637 82.2 Industry 189.7 29.4 43 13.3 4,411 221.4 Services 197.1 30.5 123 37.9 1,602 80.4 Total/Average 645.5 100.0 324 100.0 I2 100.0 GOVERNMENT FINANCE Central Government (K Million) % of GOP FY77 FY72 FY77 Current Receipts 215.6 13.2 17.9 Current Expenditures 362.7 30.0 30.2 Current Deficit 147.1 16.8 12.2 Capital Expenditures 46.7 6.2 3.9 External Assistance (net) 174.8 16.8 14.5 /a The per capita GNP estimate calculated by the same conversion technique as the World Bank Atlas. All other conversions to dollars in this table are at the average exchange rate prevailing during the period covered. /b Preliminary. /c At factor cost. not applicable not available  Page 2 of 2 COUNTRY DATA - PAPUA NEW GUINEA MONEY, CREDIT AND PRICES 1973 1974 1975 1976 1977 (Million K outstanding end of period) Money and Quasi Money /a 195.6 320.0 245.5 277.8 428.5 Bank Credit to Public Sector 22.7 32.2 27.0 30.8 42.4 Bank Credit to Private Sector 91.9 104.5 112.5 114.2 140.1 (Percentages or Index Numbers) Money and Quasi Money as % of GDP 24.8 30.8 24.5 26.3 35.6 Consumer Price Index (1971 = 100) 111.0 143.4 154.1 167.3 173.6 Annual Percentage Changes in: Consumer Price Index (1971 = 100) 4.8 29.2 7.5 8.6 3.8 Bank Credit to Public Sector .. 41.9 -16.1 14.1 37.7 Bank Credit to Private Sector .. 13.7 7.7 1.5 22.7 BALANCE OF PAYMENTS la MERCHANDISE EXPORTS (AVERAGE FY74-77) FY74 FY75 FY76 FY77 US$ Million % (US$ million) - Exports of Goods 676.3 509.0 422.1 611.4 Coffee 77.2 13.7 Import of Goods 330.4 486.1 429.0 491.5 Cocoa 48.7 8.6 Services (net) -332.7 -221.9 -165.1 -190.9 Copra & Copra Products 46.0 8.2 Net Transfers 222.6 189.6 136.5 183.0 Timber & Timber " 23.0 4.1 Balance on Copper Concentrates 318.8 56.6 Current Account 235.8 -9.4 -35.5 112.0 All Other Commodities 49.7 8.8 Total (excl. Re-exports) 563.4 100.0 Private Capital EXTERNAL DEBT, DECEMBER 31, 1977 (net) 124.1 73.8 52.7 93.9 Public MlT Loans (net) 53.8 46.9 16.6 7.6 US$ Million Errors and Omissions /b -188.5 -161.8 -52.7 -56.4 Public Debt, incl. Guaranteed 292.2 Change in Nonguaranteed Private Debt reserves (- = increase) -225.2 50.5 18.9 -157.1 Total Outstanding & Disbursed 292.2 FUEL AND RELATED DEBT SERVICE RATIO FOR FY77 tc MATERIALS FY74 FY75 FY76 % (US$ million)- Imports 28.9 52.5 60.0 Public Debt, incl. Guaranteed 4.0 Exports ., 0.1 0.1 Nonguaranteed Private Debt Total Outstanding & Disbursed 4.0 RATE OF EXCHANGE IBRD/IDA LENDING (as of 12/31/77) FY75 1977 IBRD IDA US$1.00 = KO.73 US$1.00 = K0.79 (US$ million) K1.00 = US$1.37 K1.00 = US$1.26 Outstanding & Disbursed 50.6 25.5 FY76/77 1978 /d Undisbursed 13.7 24.4 US$1.00 = KO.79 US$1.00 = KO.71 Outstanding incl. K1.00 = US$1.26 K1.00 = US$1.40 Undisbursed 64.3 49.9 /a PNG as part of the Australian monetary system had no complete, separate balance of payments. Figures on private capital and monetary movements are rough estimates through FY75. lb Including capital n.e.i. Tc Ratio of debt service to exports of goods and nonfactor services. /d Approximate .. not available  IBRD1 3730__ =<-\e 0, _oO i4^Z