Papua New Guinea showed satisfactory performance under the Stand-By Arrangement. Executive Directors commended the macroeconomic stabilization and structural reform, and emphasized the need to maintain fiscal and monetary stances. They appreciated the improved governance, transparency, and efficiency of the public sector, as indicated by the recent assessment of Papua New Guinea's observance of the code on fiscal transparency. They indicated the need to strengthen the technical and managerial capacity of the National Statistical Office, and noted the potential role of technical assistance in improving statistics.
The staff supports the authorities’ request for a waiver of applicability of end-September 2000 quantitative performance criteria. Data to assess observance of end-September performance criteria are not yet available. However, staff believes that the program is on track, and data for end-August and partial data for September indicate that all quantitative performance criteria are likely to have been observed.
The Fiscal Transparency Module for the Report on the Observance of Standards and Codes was issued to the Board on October 11. As noted already by Mr. Taylor, the authorities of PNG are broadly in agreement with the recommendations of the report, which focused mainly on improving fiscal management by enhancing budget preparation, execution and reporting, and strengthening watchdog agencies.
Even before the preparation of the ROSC, the government in power since August 1999 initiated important steps to strengthen expenditure control, clear arrears, and improve information management. The budget preparation process for the 2001 budget is being conducted in a transparent and consultative manner. The scope of the government sector will be reduced in the course of the privatization process. The broad public sector reform program will improve fiscal management in many ways: reporting systems are to be strengthened, the accountability and the professionalism of the civil service enhanced, and the policy planning and decision-making process improved. Measures to strengthen watchdog agencies are an important component of the World Bank SAL program. An FAD TA mission scheduled for December will assist with the reconciliation of monetary and fiscal data, and assess options to enhance the coverage of fiscal statistics.