{ "title": "Press Release: IMF Approves US$115 Million Stand-By Credit for Papua New Guinea", "publication": "IMF News, March 29, 2000", "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr0023", "canonical": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr0023", "overlayPath": "/en/news/articles/2015/09/14/01/49/pr0023/index.md", "summary": "IMF approved a 14-month stand-by credit for Papua New Guinea equivalent to SDR 85.54 million (about US$115 million) to support the government's economic program for 2000-01.", "publishDate": "2000-03-29", "sections": [ { "heading": "Approval and Financial Terms", "content": "- IMF approved a 14-month stand-by credit for Papua New Guinea equivalent to SDR 85.54 million (about US$115 million) to support the government's economic program for 2000-01.\n- The first disbursement of SDR 10 million (about US$13.4 million) is available immediately.\n- Papua New Guinea joined the IMF on October 9, 1975 and its quota is SDR 131.60 million (about US$177 million).\n- Its outstanding use of IMF financing currently totals SDR 11.85 million (about US$16 million)." }, { "heading": "Executive Board Commentary (Eduardo Aninat, Deputy Managing Director)", "content": "- Program objectives:\n - Restore macroeconomic stability.\n - Achieve sustainable growth by reducing inflation, strengthening the external position, and reducing the budget deficit.\n - Improve public sector governance, promote private sector development, and strengthen the financial system.\n- Fiscal stance and contingencies:\n - Program envisages an overall fiscal deficit of 1½ percent of GDP, with a balanced budget in the coming year and beyond.\n - Strengthening control over government expenditure is a key fiscal reform measure.\n - Authorities would be prepared to take additional offsetting measures if government revenues fall below program targets.\n- Monetary and financial measures:\n - Authorities have taken action to mop up excess liquidity that emerged in 1999.\n - Passage of a new Central Bank Act should facilitate conduct of monetary policy, enhance powers and independence of the central bank, and reduce government's recourse to central bank credit.\n - A new Banks and Financial Institutions Act will be adopted to strengthen financial sector supervision and regulation.\n- Structural progress:\n - Rural Development Program to be replaced by the District Development Program Grant to enhance transparency, fairness and cost effectiveness.\n - A detailed framework for privatization of large public enterprises has been established." }, { "heading": "Background: Late 1990s Shocks and Fiscal Deterioration", "content": "- Shocks and impacts:\n - Severe drought, the Asian economic crisis, and export price declines for copper and gold.\n - Real GDP fell significantly; fiscal position deteriorated.\n - Tax revenue fell by 4½% of GDP in 1998, led by large declines in the petroleum sector.\n - Overall government deficit shifted from near balance in 1997 to an overall deficit equivalent to 2.1% of GDP in 1998 that widened in the first half of 1999.\n - Deficit financed mainly by recourse to central bank financing, causing significant decline in net official international reserves and the external value of the kina.\n - Annual rate of inflation rose to around 20% at the end of 1998 and early 1999.\n- Policy response:\n - New administration formed in mid-1999 introduced a reform program and revenue/expenditure adjustments, producing a small overall surplus in central government operations during the second half of 1999.\n - The 2000 program seeks sustainable growth through restoration of macroeconomic stability and key structural reforms." }, { "heading": "Macroeconomic Policies Under the Program: 2000 Targets", "content": "- Growth and inflation:\n - Pickup in growth to about 4½%.\n - Reduction in inflation to 5% by the end of the year.\n- Reserves and fiscal:\n - Increase in gross official reserves to $379 million.\n - 2000 budget targets overall government deficit of 1.5% of GDP in 2000, including clearance of all remaining government arrears.\n - Beyond 2000, the budget is expected to maintain a balanced position.\n - Contingency revenue measures to be implemented if budget targets are jeopardized.\n- Monetary aggregates and actions:\n - Authorities reduced reserve money by 20% in January 2000.\n - For the year as a whole, reserve money is targeted to decline by 1.3%." }, { "heading": "Structural Reforms", "content": "- Public expenditure and governance:\n - Strengthen public expenditure control and enhance transparency and effectiveness of development spending.\n - Replace Rural Development Program with District Development Program Grant operating under new rules of delivery and accountability.\n - Government conducting a review of the tax system to enhance fairness and improve competitiveness and efficiency.\n- Central bank and financial sector:\n - Central bank will no longer underwrite the issue of treasury securities at a predetermined price; it will receive the auction-determined interest rate from the government.\n - New Central Bank Act (CBA) drafted with IMF and Reserve Bank of Australia (RBA) assistance to strengthen independence and accountability and aim at price stability.\n - Revised Banks and Financial Institutions Act (BFIA) being prepared to strengthen licensing and supervision of banks and nonbank financial institutions; BFIA will outlaw pyramid-type schemes that emerged in 1999.\n- Privatization and civil service:\n - Initiate privatization of large state enterprises.\n - Carry out comprehensive civil service reform." }, { "heading": "Financing Needs and Donor Support", "content": "- In addition to the IMF stand-by credit, reform program to be supported by financing from the World Bank and bilateral official contributions.\n- Consultative group meeting held in Port Moresby on November 8-9, 1999.\n- Donor support has firmed; expected that the financing gap of $180 million could be covered by the World Bank and through balance of payments support from bilateral donors." }, { "heading": "Papua New Guinea: Selected Economic Indicators, 1996-2001 (key figures preserved)", "content": "- Nominal GDP (1998): US$4.2 billion\n- Population (1998): 4.5 million\n- GDP per capita (1998): US$994\n- Quota: SDR 131.6 million\n\n- Real sector (percent change)\n - Real GDP growth: 1996: 2.9; 1997: -2.4; 1998: 1.4; 1999: 3.8; 2000: 4.5; 2001: 5.9\n - Mineral: 1996: -11.8; 1997: -21.0; 1998: 19.1; 1999: 14.1; 2000: 1.0; 2001: ...\n - Nonmineral: 1996: 8.3; 1997: 3.2; 1998: -2.7; 1999: 0.9; 2000: 5.6; 2001: (not provided)\n\n- CPI (annual average): 1996: 11.6; 1997: 3.9; 1998: 13.6; 1999: 17.8; 2000: 14.6; 2001: (not provided)\n- CPI (12 months): 1996: 5.3; 1997: 21.8; 1998: 20.0; 1999: 5.0; 2000: 4.0\n\n- Central government budget (percent of GDP)\n - Revenue and grants: 1996: 26.1; 1997: 29.4; 1998: 25.8; 1999: 24.6; 2000: 25.1; 2001: 24.2\n - Expenditure and net lending: 1996: 26.5; 1997: 29.2; 1998: 27.9; 1999: 26.6\n - Overall balance, cash basis (excluding grants) 2/ 3/: 1996: -2.8; 1997: -4.0; 1998: -7.4; 1999: -7.2; 2000: -6.2; 2001: -3.9\n - Overall balance, cash basis (including grants) 2/ 3/: 1996: -0.3; 1997: 0.1; 1998: -2.1; 1999: -1.5; 2000: -0.1\n - Underlying balance 4/: 1996: 0.2; 1997: 0.4\n\n- Money and credit (year-on-year percentage change)\n - Total domestic credit: 1996: 5.8; 1997: 22.7; 1998: 17.1; 1999: -0.7\n - Net credit to government: 1996: 19.2; 1997: 15.4; 1998: 11.2; 1999: -11.4; 2000: -22.1\n - Credit to the private sector: 1996: -7.8; 1997: 36.3; 1998: 29.0; 1999: 9.2; 2000: 13.8\n - Broad money: 1996: 31.3; 1997: 6.8; 1998: 1.8; 1999: 8.9; 2000: 8.8\n\n- Balance of payments (US$ mn.)\n - Exports, f.o.b.: 1996: 2,603; 1997: 2,186; 1998: 1,849; 1999: 1,998; 2000: 2,234; 2001: 2,257\n - Imports, c.i.f.: 1996: -1,791; 1997: -1,972; 1998: -1,425; 1999: -1,505; 2000: -1,684; 2001: -1,909\n - Current account: 1996: 289; 1997: -263; 1998: 23; 1999: 55; 2000: -18; 2001: -112\n - Exceptional financing (net): 1996: 15; 1997: 25; 1998: 109; 1999: 180; 2000: 60\n - Overall balance: 1996: 382; 1997: -204; 1998: -189; 1999: 42; 2000: 128; 2001: 0\n\n- Reserves and debt (end of year, US$ mn.)\n - Gross official reserves: 1996: 586; 1997: 380; 1998: 187; 1999: 204; 2000: 379; 2001: 483\n - Net international reserves: 1996: 532; 1997: 328; 1998: 139; 1999: 181; 2000: 307; 2001: 360\n - (In months of nonmining imports, c.i.f.): 4.9; 2.8; (years not mapped explicitly)\n - Medium- and long-term external debt (percent of GDP): 1996: 35.5; 1997: 40.8; 1998: 45.8; 1999: 43.8; 2000: 39.1; 2001: 32.4\n - Debt-service ratio (percent of external current receipts): 1996: 17.7; 1997: 17.0; 1998: 22.5; 1999: 27.3; 2000: 16.9; 2001: 14.2\n\n- Exchange rates\n - US$ per Kina (end-period) 5/: 1996: 0.74; 1997: 0.57; 1998: 0.48; 1999: 0.37; 2000: 0.38\n - Nominal effective rate 6/: 1996: -5.4; 1997: -24.8; 1998: -20.9\n - Real effective rate 6/: 1996: -1.8; 1997: -11.2; 1998: -8.7\n\nSource: Press Release No. 00/23 — IMF (March 29, 2000).\n\n---\n\n\n References\n\n- Papua New Guinea and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr0023" } ], "bullets": [ "[Markdown version](/en/news/articles/2015/09/14/01/49/pr0023/index.md)", "[Structured JSON version](/en/news/articles/2015/09/14/01/49/pr0023/index.json)", "[Bundle manifest](/en/news/articles/2015/09/14/01/49/pr0023/bundle-manifest.json)", "Published: March 29, 2000", "IMF approved a 14-month stand-by credit for Papua New Guinea equivalent to SDR 85.54 million (about US$115 million) to support the government's economic program for 2000-01.", "The first disbursement of SDR 10 million (about US$13.4 million) is available immediately.", "Papua New Guinea joined the IMF on October 9, 1975 and its quota is SDR 131.60 million (about US$177 million).", "Its outstanding use of IMF financing currently totals SDR 11.85 million (about US$16 million).", "Program objectives:", "Fiscal stance and contingencies:", "Monetary and financial measures:", "Structural progress:", "Shocks and impacts:", "Policy response:", "Growth and inflation:", "Reserves and fiscal:", "Monetary aggregates and actions:", "Public expenditure and governance:", "Central bank and financial sector:", "Privatization and civil service:", "In addition to the IMF stand-by credit, reform program to be supported by financing from the World Bank and bilateral official contributions.", "Consultative group meeting held in Port Moresby on November 8-9, 1999.", "Donor support has firmed; expected that the financing gap of $180 million could be covered by the World Bank and through balance of payments support from bilateral donors.", "Nominal GDP (1998): US$4.2 billion", "Population (1998): 4.5 million", "GDP per capita (1998): US$994", "Quota: SDR 131.6 million", "Real sector (percent change)", "CPI (annual average): 1996: 11.6; 1997: 3.9; 1998: 13.6; 1999: 17.8; 2000: 14.6; 2001: (not provided)", "CPI (12 months): 1996: 5.3; 1997: 21.8; 1998: 20.0; 1999: 5.0; 2000: 4.0", "Central government budget (percent of GDP)", "Money and credit (year-on-year percentage change)", "Balance of payments (US$ mn.)", "Reserves and debt (end of year, US$ mn.)", "Exchange rates", "[Papua New Guinea and the IMF](http://www.imf.org/external/country/PNG/index.htm)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2015/09/14/01/49/pr0023/index.md", "json": "/en/news/articles/2015/09/14/01/49/pr0023/index.json", "bundleManifest": "/en/news/articles/2015/09/14/01/49/pr0023/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T15:48:49.106Z" }