FOR OFFICIAL USE ONLY - World Bank · 2016. 7. 12. · document of the world bank for official use...
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Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No. 53727-PG
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
INTERNATIONAL DEVELOPMENT ASSOCIATION
INTERNATIONAL FINANCE CORPORATION
COUNTRY ASSISTANCE STRATEGY PROGRESS REPORT
FOR THE
INDEPENDENT STATE OF PAPUA NEW GUINEA
FOR THE PERIOD FY08-FY11
March 30, 2010
Papua New Guinea, Pacific Islands and Timor-Leste Country Management Unit
East Asia and Pacific Region, EAP
East Asia and Pacific Department
International Finance Corporation, IFC
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.
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Acknowledgements
This CAS Progress Report was produced by a multi-sectoral team that included: Laura Bailey,
Natasha Beschorner, Sean Bradley, Peter Cusack, Dodi Doiwa, Adriana Eftimie, Chas Feinstein,
Marianne Grosclaude, Graeme Hancock, Wendy Hughes, Susan Ivatts, Erik Johnson, Angela
Khaminwa, Nick Menzies, Aleta Moriarty, Gavin Murray, Raymond Palangat, Demetrios
Papathanasiou, Sudesh Ponnappa, Joy Sagati, Kanthan Shankar, Manohar Sharma, Aparnaa
Somanathan, Jim Stevens, John Strongman, Mona Sur and Sonya Woo.
The World Bank Group greatly appreciates the close collaboration with the Government of
Papua New Guinea in the preparation of this CAS Progress Report, as well as valuable feedback
from members of civil society, the private sector, and development partners.
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.
The Country Assistance Strategy for Papua New Guinea (Report 41571- PG) was discussed in November 2007
CURRENCY EQUIVALENTS
(Exchange rate effective as of March 1, 2010)
Currency Unit: Papua New Guinea Kina (K)
K 1 = US$0.3725
US$ 1 = K 2.6846
WEIGHTS AND MEASURES: Metric System
FISCAL YEAR: January 1 – December 31
ABBREVIATIONS AND ACRONYMS
AAA Analytical and Advisory Activities
ABG Autonomous Bougainville Government
ADB Asian Development Bank
ASM Artisanal and Small-Scale Mining
ASTAE Asia Alternative Energy Program
AusAID Australian Agency for International Development
CAS Country Assistance Strategy
CAE Country Assistance Evaluation
CBO Community-Based Organization
CDD Community-Driven Development
CEM Country Economic Memorandum
CGAP Consultative Group to Assist the Poor
CPAR Country Procurement Assessment Report
CPI Consumer Price Index
DM Development Marketplace
DME
DP
Di-methyl Ether
Development Partners
DSA Debt Sustainability Analysis
DSDLG District Service Delivery and Local Governance
EAP East Asia and Pacific
EC European Commission
ECP Enhanced Cooperation Program
EITI Extractive Industries Transparency Initiative
ESW Economic and Sector Work
FCP Forestry and Conservation Project
FCPF Forest Carbon Partnership Facility
FIAS Foreign Investment Advisory Service
FODE Flexible and Open Distance Education
FSAP Financial Sector Assessment Program
FTI Fast Track Initiative
GDLN Global Development Learning Network
GDP Gross Domestic Product
GEF Global Environment Facility
GEF-PAS GEF Pacific Alliance for Sustainability
GoPNG Government of Papua New Guinea
GTL Gas-to-Liquids
HIV/AIDS Human Immunodeficiency Virus/Acquired Immunodeficiency
Syndrome
IBRD International Bank for Reconstruction and Development
IDA International Development Association
IFAD International Fund for Agriculture Development
IFC International Finance Corporation
IMF International Monetary Fund
IT Information Technology
IRC Internal Revenue Commission
ISN Interim Strategy Note
JCS Joint Country Strategy
JSDF Japan Social Development Fund
LICUS Low Income Countries Under Stress
LNG Liquefied Natural Gas
MDG
MDTF
Millennium Development Goal
Multi-Donor Trust Fund
MIGA Multilateral Investment Guarantee Agency
MSME Micro, Small, and Medium Enterprises
MTDS Medium-Term Development Strategy
NGL Natural Gas Liquids
NGO Non-Governmental Organization
NPV Net Present Value
NZAID New Zealand Agency for International Development
PAC Public Accounts Committee
PEP-Pacific Private Enterprise Partnership for the Pacific
PERR Public Expenditure Review and Rationalization
PESD Public Expenditure and Service Delivery
PETS Public Expenditure Tracking Survey
PIC Public Information Center
PFR Public Finance Review
PNG
PNG LNG
Papua New Guinea
Papua New Guinea Liquefied Natural Gas Project
PNGSDP Papua New Guinea Sustainable Development Program, Ltd.
PNGSEL Papua New Guinea Sustainable Energy, Ltd.
PPAP Productive Partnerships in Agriculture Project
PPP Public-Private Partnership
PTF Partnership for Transparency Fund
RDP Rural Development Program
REDD Reduced Emissions from Deforestation and Degradation
RMRP Road Maintenance and Rehabilitation Project
SADP Smallholder Agriculture Development Project
SEFP Sustainable Energy Financing Project
SWAp Sector-Wide Approach
SIOA Strengthening Institutions of Oversight and Accountability
SWG Sector Working Group
TA Technical Assistance
TSLP Teacher‟s Solar Lighting Project
UN United Nations
UNAIDS Joint United Nations Programme on HIV/AIDS
UNDP United Nations Development Programme
WB World Bank
WHO World Health Organization
TABLE OF CONTENTS
PAPUA NEW GUINEA
COUNTRY ASSISTANCE STRATEGY – PROGRESS REPORT
I. Introduction .......................................................................................................................... 1
II. Economic and Policy Developments .................................................................................... 1
III. Progress Towards CAS Outcomes ....................................................................................... 4
IV. Adjustments to CAS Based on Implementation Progress .................................................... 7
V. Risks ................................................................................................................................... 13
TABLES
Table 1. Adjusted CAS Outcomes Expected by FY2011 ………………………………… .............. 6
Table 2. Changes in the CAS Program for FY2008-11 ...................................................................... 8
TEXT BOXES
Box 1: New Strategic Frameworks for National Development ....................................................... 3
Box 2: Gender-Inclusive and Gender-Focused Programming in PNG ............................................ 7
Box 3: Addressing the “Youth Challenge” through the CAS Program ........................................... 9
ANNEXES
A. Country at a Glance ............................................................................................................ 15
B. CAS 2008-2011, Revised Results Matrix .......................................................................... 18
C. Selected Indicators of Bank Portfolio Performance and Management ............................... 26
D. IBRD/IDA Program Summary ........................................................................................... 27
E. IFC and MIGA Program ..................................................................................................... 28
F. Summary of Non-Lending Services ................................................................................... 29
G. IBRD/IDA and Grants Operations Portfolio ...................................................................... 30
H. IFC Committed and Disbursed Outstanding Investment Portfolio .................................... 31
I. Social Indicators ................................................................................................................. 32
J. Key Economic Indicators ................................................................................................... 33
MAP – IBRD 33463 .............................................................................................................................. 36
IDA/IBRD IFC
Vice President: James W. Adams Rashad-R. Kaldany
Country Director: Ferid Belhaj
Kanthan Shankar
Karin Finkelston
Task Team: Laura E. Bailey
Erik Johnson
Gavin Murray
Peter Cusack
1
I. INTRODUCTION
1. This CAS Progress Report assesses implementation of the Bank‟s FY2008-11 Country
Assistance Strategy (CAS) at mid-term. The program presented in the CAS was a menu of
possible assistance activities of interest to Government which allowed flexibility to focus on
issues and areas where Bank Group assistance holds the most promise. The first two years of
CAS implementation, therefore, have been a disciplined process of selectively prioritizing this
menu with the Government of Papua New Guinea (GoPNG) and key stakeholders, with strong
consideration given to building counterpart relationships and candidly assessing comparative
advantage vis-à-vis other development partners. This flexibility, so essential to the process of
rebuilding relations with Government and re-launching an active portfolio of projects,
necessarily required choices and trade-offs during the first two years of CAS implementation.
2. While the objectives of the FY2008-11 CAS remain relevant, progress towards those
objectives has been mixed; the program proposed in the CAS has been adjusted to accommodate
the changes in the country‟s economic dynamics posed by the global economic crisis and the
new large-scale natural gas projects, and has been recalibrated to take due account of the
capacity constraints present as the portfolio is rebuilt. The program has also been slightly refined
to be appropriately responsive to the Government‟s development agenda as expressed in their
two new strategy frameworks: National Vision 2050 and the Long-Term Development Strategy
(2010-2030).
3. The cross-cutting issues of gender and youth, critical aspects of the challenge of socially
inclusive and equitable development, remain important dimensions in development efforts in
Papua New Guinea. Both themes have been carried through in CAS implementation through a
dual approach of focused interventions and mainstreaming in sectoral operations; these themes
are further explored in boxes 2 and 3 later in this Progress Report.
II. ECONOMIC AND POLICY DEVELOPMENTS
4. PNG‟s economy is weathering the impact of the global economic crisis well, with a
robust pace of economic growth. In 2009 the economy slowed modestly to 3.9 percent,
compared with the growth of 6-7 percent in 2007-08; this continues the longest uninterrupted
period of economic growth – seven years – since PNG‟s independence in 1975. The growth
remains broad-based, extending to both the extractive industry and other sectors (in particular
construction and telecommunications). Although formal sector employment is modest, solid
formal employment growth has also continued, with the conditions in the skilled segment of the
labor market very tight.
5. Prudent macroeconomic management during the most recent commodity boom helped
PNG build resiliency to cope with the current global crisis. During the boom years the
government prudently capped growth of government spending, saved temporary windfall
mineral revenue and paid down its most expensive external debt; the non-mineral budget deficit
(a key indicator of fiscal stance in a resource rich economy) remained largely steady around 5-6
percent of GDP, close to the estimated long-term sustainable level. With the decline of prices of
copper and oil, two of PNG‟s main export commodities, these prudent policies provided fiscal
space to adjust to the external shock.
2
6. PNG faces a challenge, however, in calibrating the magnitude of fiscal response to the
global crisis, given the already robust growth performance of PNG‟s economy and volatility of
PNG‟s future mineral revenue stream. Currently, indications are that the growth of public
expenditure financed by windfall revenue savings from trust accounts has accelerated
significantly in 2009 and the non-mineral budget deficit may increase in 2009 to 10-11 percent
of GDP. Medium-term fiscal pressure will also arise from contingent government liabilities,
such as external borrowing to fund the state stake in the PNG Liquefied Natural Gas Project
(PNG LNG) and investment commitments to landowners to enlist their support.
7. The prospect of the PNG LNG Project is also helping to buoy the economy.
Implemented by a consortium of international and domestic investors led by Exxon Mobil, the
project is estimated to cost around US$17 billion including finance charges, which is more than
double PNG‟s current annual GDP. The project received the Final Investment Decision approval
in December 2009, and Sales and Purchase Agreements were completed in February 2010.
Major construction and capital contracts have been issued, and gas production is scheduled to
start in 2014. Inflow of investment for project‟s design and early works, and the boost to private
sector and consumer confidence, helped counter the bad global economic news in 2008-2009,
and buffered the negative impact of the terms-of-trade shock.
8. In response to the global crisis, monetary and exchange rate policies have been made
more flexible to maintain external sustainability and to curb inflationary pressures. The collapse
of commodity prices in the fall of 2008 and capital outflows had an immediate effect on PNG‟s
foreign exchange reserves, which declined from the high of US$2.7 billion in mid 2008 to less
than US$2 billion by early 2009 (a fall of 25 percent). Following the tightening of monetary
policy in late 2008 through early 2009, and the somewhat delayed adjustment of the exchange
rate, foreign exchange reserves stabilized and reached reaching $2.4 billion in end October from
$2.1 billion in end 2008. The monetary tightening helped bring inflation under control; after
peaking at 13.5 percent in the third quarter of 2008, headline inflation dropped to 7 percent by
mid-2009, but sustained high spending from trust accounts, and increased private sector activity
driven by PNG LNG, has renewed inflationary pressure in 2009, and 9.5 percent is estimated for
2010. Monetary policy has moved more towards neutrality and the exchange rate has
appreciated somewhat, mostly unwinding movements during the global crisis.
9. In the medium-term, PNG is facing significant volatility in its export and budget revenue
base, underscoring the need for continued prudent fiscal management and expenditure smoothing
of recent years. The PNG LNG project holds a major upside potential in terms of growth and
revenue for the PNG economy, especially after production starts in 2014. As with other major
natural resource projects, however, tax revenues from PNG LNG project are not expected to start
flowing until the end of the next decade, several years after the start of production. Meanwhile,
in the nearer-term (2011-2013) state revenues from existing extractive projects are projected to
start declining. Given these uncertainties and the volatility of future revenue streams, it will be
important to continue the prudent fiscal policy laid out in the Medium-Term Fiscal Framework,
aimed at expenditure smoothing commodity price and production cycles. The 2010 Budget
indicated that stimulus spending will continue from an increased development budget and from
trust funds, and that none of the additional minerals revenue forecast for 2010 will be allocated
to debt repayment; both of these signals are potentially worrying.
10. Translating strong macroeconomic performance and extractive industry revenues into a
broad improvement in living standards remains a key challenge. Ensuring the integrity of the
3
Box 1: New Strategic Frameworks for National Development
The National Vision 2050 articulates the aspirations and long-term vision of the country and
identifies the seven strategic focus areas that are deemed necessary to deliver “a smart, wise, fair,
healthy, and happy society by 2050”: human capital development (including gender, youth, and
people empowerment); wealth creation; institutional development and service delivery; security and
international relations; environmental sustainability and climate change; spiritual, cultural, and
community development; and strategic planning, integration, and control.
The Long-Term Development Strategy (2010-2030) maps out the development path the Government
seeks to take for the next 20 years, with the goal of “becoming a prosperous middle income country
by 2030”. This path will be implemented through a series of five-year plans which detail specific
public investments and policies to advance the following objectives: human development (with a
focus on basic health systems and universal basic education); equality and participation (through
improved transport services, electricity, education and health status, and business assistance);
national sovereignty and self reliance (through good governance and broad-based growth);
sustainable management of natural resources and environment; and “PNG ways” reflecting the
traditional wisdom and knowledge of the people. The LTDS makes explicit provision for a
significant public investment program to channel mineral resources into improved public
infrastructure.
public financial management for service provision, improving efficiency of sectoral spending,
strict control over the size and performance of the civil service, and transparency and
accountability in budget management will be crucial in converting the forthcoming windfall
revenue into palpable improvement in service delivery. In this regard, redoubled efforts to
improve the quality and efficiency of spending and strengthen overall governance will be
important. Action to invigorate the existing mechanisms is critical, perhaps building upon high-
profile efforts such as the regular coverage in one of the nation‟s newspapers of the
parliamentary Public Accounts Committee and its investigations.
11. There has been important progress in key areas of structural reform in recent years; in
particular, opening markets in telecommunications and air transport has produced major welfare
gains for the population. To leverage higher levels of domestic and foreign investment – and the
diversified economy and increased employment that could eventuate – attention is needed to
challenges such as maintaining law and order, improving the business climate, commercializing
parastatals, reducing the regulatory and licensing burden, and equitably accessing resources
(including land) for development. Developing infrastructure – electricity, telecommunications,
road and other transport – continues to be a critical precondition for accelerated private sector-
led growth, and the Bank will intensify its dialogue with GoPNG in order to identify useful
opportunities.
12. The Government has recently engaged in two processes whose results together provide
the strategic context and framework for development assistance going forward: the National
Vision 2050, which articulates the aspiration of diversifying away from minerals wealth towards
broader growth and employment and improved service delivery, and the Long-Term
Development Strategy (LTDS) 2010-2030, which provides more specific guidance on key
national priorities that allow the WBG to refine our proposed support to GoPNG. Specifically for
the Bank Group, the LTDS framework invites a strategic approach in the energy sector and
offers entry points for community infrastructure and subnational service delivery.
4
III. PROGRESS TOWARDS CAS OUTCOMES
13. Progress towards CAS outcomes has been mixed, with some notable advances in
extractive industries sector governance and in pro-poor access to productive infrastructure, and
notable disappointments in public financial management reform and mechanisms for improved
subnational service delivery. To some extent, the lagging performance against expected CAS
outcomes is due to the delay in re-launching the portfolio, with projects approved by the Bank
Board in 2008 not being signed and becoming effective until mid-2009. Given the Bank‟s
somewhat turbulent relationship with past Governments, especially on issues such as land reform
and forestry sector governance, the process of rebuilding relationships in order to relaunch the
portfolio was necessarily effort- and time-intensive.
14. The World Bank Group has been particularly mindful to collaborate with other
development partners under GoPNG leadership. While the size of the Bank's portfolio is small in
comparison with other donors (particularly Australia), the neutrality of the multilateral structure
allows the Bank to leverage technical expertise and broker unique connections in other regions
whose innovation and experiences might be of interest to GoPNG, including from other
resource-rich countries who have successfully advanced their development agendas.
15. In the public finance arena, Bank inputs currently focus on providing analytical work on
the challenges in macroeconomic management of minerals wealth; GoPNG considers this the
highest priority for Bank involvement, and a renewed policy dialogue process is underway based
on the Bank‟s Economic Note on Managing Resource-Induced Volatility, delivered in March
2010. National authorities have requested a Financial Sector Assessment Program (FSAP) to be
undertaken in May 2010. While activities proposed in the CAS to directly support oversight
institutions and engage in operational reforms in procurement and public financial management
have not been taken up by Government, the PNG authorities have welcomed Bank analytical
work on the challenges in managing resource-induced volatility, and an Economic Note on that
topic was delivered in March 2010.
16. In addition, the GoPNG Treasury decision to progress discussions on implementation of
the Extractive Industries Transparency Initiative (EITI) represents a welcome advance in the
governance reform agenda. Taken together with the ongoing progress in mining sector
governance, and the signal that GoPNG is considering a similar sector program for the petroleum
sector, prospects for improved mineral governance are improving. Given the centrality of
mineral wealth to the country‟s revenue and growth profile, Bank support for sector governance
is critical.
17. Progress has been made in laying the groundwork for improvements in the business
regulatory environment. While PNG‟s position on the global “Doing Business” scale suffered in
comparison to neighbors who enacted important reforms, the remainder of the CAS period
should see PNG also enacting reforms that will help improve its standing, and could also see the
first public-private partnerships inked under the new ADB-supported Public-Private Partnership
(PPP) policy framework. IFC engagement in PPP has focused on providing advice on specific
transactions and investment options to state enterprises. Progress in strengthening the financial
sector has been less straightforward, with Government making slow progress on planned
payments system reform, establishment of a private credit report bureau, and taking a laissez
faire stance on regulation of potential mobile phone banking. IFC has worked to establish
partnerships in the banking sector, including provision of a trade finance facility for a
5
commercial bank. The December 2009 request for preparation of an IDA-IFC Risk-Sharing
Facility to support SME access to finance promises to improve overall access to financial
services and to increase PNG enterprises‟ uptake of significant near-term subcontracting
opportunities associated with large enclave projects.
18. The World Bank continues to coordinate closely with the Asian Development Bank and
AusAID on their ongoing work in public finance and fiduciary reforms. As a successor to the
Public Expenditure Review and Revitalization (PERR) process, these three donors (joined
recently by the European Union) have proposed a Framework for Enhancing Fiscal Management
to GoPNG as a platform for deepening policy reform in the most critical public finance areas.
The Bank is also complementing the work of other development partners on governance and
transparency (Australia with the Attorney General‟s Office and the Ombudsman‟s Commission,
and UNDP with the Public Accounts Committee of Parliament) by focusing on extractive
industry transparency (as described above), by intensifying fiduciary capacity building efforts in
Bank-supported projects to strengthen governance „from within‟, and by undertaking analytical
work to understand the resource allocation process at the local level including the roles and
activities of policy-makers, administrators, and communities.
19. World Bank support to improve productivity and livelihood opportunities is gathering
speed after delays early in the CAS period, and investments in key cash crop subsectors are now
poised to begin delivering tangible benefits for rural smallholders by the end of 2011. Efforts to
identify an appropriate niche for Bank support to improved subnational service delivery,
anticipated to be channeled through a community-driven approach involving block grants, also
suffered delays, due both to a need for better coordination with other donors interested in this
areas, and to Government‟s request in August 2009 that donors delay new project design efforts
until the new national strategy documents (Vision 2050 and LTDS) were launched. Discussions
with potential national and provincial government partners were renewed in March 2010, and a
joint decision with Government on a mutually agreed approach to subnational community-driven
work is expected by June 2010.
20. Of concern to GoPNG and all development partners is how little progress has been made
towards the MDGs, most especially in health and education; momentum is stalled or negative in
most areas, in spite of significant attention and public debate. Although the Government has not
yet requested Bank financing for program loans in health or education, strong and well-
coordinated sector dialogue is ongoing and the Bank has responded quickly to requests for
analytical work in both areas. In education, joint appraisal of GoPNG‟s UBE plan has been
completed to support a possible Fast Track Initiative grant application to the Catalytic Fund, and
early grade reading assessments are underway; in health, a sector human resources and payroll
study is nearing completion and will be complemented by a fiscal space analysis coordinated
with the Departments of Health and Treasury, and preparations for an HIV-AIDS Integrated Bio-
Behavioral Survey is now underway with all funding secured. Considering the critical and
dramatic improvement in service delivery needed to galvanize progress towards the MDGs, and
the opportunity presented by the medium-term revenue flows from resource projects, the Bank is
redoubling efforts to approach the challenge of quality budget execution and service delivery
from a „sectoral angle‟.
6
21. Table 1 shows the adjusted outcomes expected in the CAS period; outcomes tied to the
budget process and to oversight institutions were dropped to reflect GoPNG preference for other
donors than the Bank in those areas, and additional CAS outcomes are offered for new
interventions requested by GoPNG in EITI and SME Access to Finance.
Table 1: Adjusted CAS Outcomes Expected by FY2011
Strategic Longer-Term Country Outcomes CAS Outcomes the World Bank Group Expects to
Influence
CAS Pillar I: Promoting and maintaining sound economic and natural resource management
Promote sound macroeconomic and public
expenditure management
GoPNG shows continued awareness of the importance of
maintaining fiscal discipline and a stable macroeconomic
environment
Promote good governance through
independent and capable oversight
institutions and improved citizen monitoring
Expanded and strengthened multi-stakeholder mechanisms to
review overall policymaking and extractive industries
Increased public availability of accessible information to
support monitoring of government performance
Promote well-governed, sustainable
extractive industries offering significant
benefits at local as well as national levels
Strengthened institutional structures in the mining sector,
emphasizing transparent management and resource
distribution
Program in place to leverage extractive industry and enclave
project revenues for broader SME employment
Promote effective and sustainable
management of PNG‟s natural resources
Strategic framework for disaster risk management and
climate change adaptation and mitigation adopted by
GoPNG, and investment program supported by partners
CAS Pillar II: Improving livelihoods and service delivery, especially for the rural poor
Promote the ability of the private sector to
provide significant employment and
livelihood opportunities
Stronger business enabling environment, with improved
financial infrastructure
Greater number of public-private partnerships in
infrastructure
Improve livelihoods through policies and
investments that promote inclusive,
sustainable growth
Sustainable increases in commercial agriculture production
and artisanal and small-scale mining
Support the development of more responsive,
accountable local governments that deliver
cost-effective public services for community
needs
Models for improved local service delivery tested through
partnerships between government and civil society, and
within and across communities
Help develop well-managed national and
local transport services
Improved condition of roads and bridges in selected
provinces
Expand access to reliable, affordable
electricity to support service delivery and
rural enterprise development
Strategic energy sector planning launched to provide
framework for investment in lower-carbon and lower-cost
electricity in rural centers and urban concentrations
Facilitate provision of reliable, affordable
access to telecommunications
Expanded access to affordable and reliable
telecommunications services in rural areas and outside Port
Moresby
Improve human development outcomes
across the country
Increased resources supporting higher primary school
participation and grade retention
Improved evidence base for health sector policies and plans
More effective national HIV/AIDS response through
evidence-based policy and interventions
Note that outcomes in italics are planned results from new program activities not foreseen in the original CAS.
7
IV. ADJUSTMENTS TO CAS BASED ON IMPLEMENTATION PROGRESS
22. The overall objectives of the FY2008-11 CAS remain valid with some adjustments. The
CAS is consistent with the National Vision 2050 which outlines the strategic directions for the
country, and with the Long-Term Development Strategy which covers a 20-year period, which
will be further operationalized through a succession of four 5-year plans. The timing of this CAS
Progress Report to coincide with these strategic frameworks has allowed a realignment of key
support envisioned in the CAS in such areas as energy and subnational service delivery to better
respond to national priorities and engage with strong champions within GoPNG.
23. The changing global and country-specific economic dynamics have provided new
opportunities not originally foreseen in the CAS, such as support for improved access to finance
for small- and medium-scale enterprises overall, and to fully exploit the subcontracting
opportunities emerging from extractive and enclave projects, as well as a shift in the energy
sector from small-scale pilot activities to sector-wide strategic dialogue and possible technical
assistance. Some adjustments are also required where the Government has chosen not to request
IDA support, notably as regards direct financial support to strengthening oversight institutions of
governance, and operational involvement in public financial management reform; the Bank is
coordinating closely with other development partners who are providing assistance in those
areas, including the European Union and the whole-of-government program from Australia.
Box 2: Gender-Inclusive and Gender-Focused Programming in PNG
Gender aspects of the development challenge in PNG are both profound and multi-dimensional; girls
are less likely to attend and complete school, women face difficulties accessing finance and entering
the formal economy, and violence against women is at epidemic levels. While many inspiring
examples of girls and women achieving success are available, and media are increasingly reporting
upon those good news stories, systematic efforts to remove the policy, institutional, and attitudinal
barriers have not been launched on large scale, and too little attention is paid to the critical linkages in
dialogue and awareness between girls and boys, and women and men.
The CAS program in many ways „grew up‟ around a foundational set of gender concerns: severe
constraints to girls growing up healthy and educated in an environment of respect with boys, and to
women participating actively and without fear in economic and community life. In building a pipeline
of projects, the Bank built on stakeholder interest to use trust fund resources to engage with women
living in mine- and petroleum-impacted communities. Now mainstreamed into one of the active IDA
credits, and implemented with strong support from GoPNG, the Chamber of Mines and Petroleum, and
local women‟s groups, the “women in mining” work has underpinned a second-generation of
initiatives, including lessons learning research with government and corporate stakeholders on
equitable benefits sharing from enclave projects. It has also helped define a targeted intervention to
empower women in post-conflict Bougainville while simultaneously building capacity of their local
governments to engage with both men and women in community development planning.
As the Bank portfolio has grown under the CAS, other interventions have been gender-informed and
gender-focused: the work with youth (see Box 3) focuses on both young women and young men in
employment and education initiatives, with design aspects that acknowledge their different challenges;
the agricultural livelihoods interventions include specific elements which support and protect access
by women to income-generating opportunities. By explicitly acknowledging the gender dynamics at
play in livelihoods and social sector interventions, a pattern is established through which future gender
interventions – whether mainstreamed or targeted – will retain a primary position in the strategic
support provided by the Bank.
8
Table 2: Changes in the CAS Program for FY2008-11 Completed or Ongoing Activities in Bold; new additions in Italics; other listings are under preparation
Pillar
Promoting and Maintaining Sound
Economic and Natural Resource
Management
Improving Livelihoods and Service
Delivery, Especially for the Rural Poor
World Bank – IDA Credits and Core AAA
IDA Credits (TA and Investment)
FY09 Mining TA Oro Province Reconstruction and
Development
Smallholder Agriculture Development
FY10
IDA-IFC Risk-Sharing Facility: Finance for
SMEs (joint with IFC) Rural Communications
Productive Partnership in Agriculture
Urban Youth Employment
FY11
Strengthening Oil-Gas Sector Governance Second Chance Education (FODE)
Community Infrastructure and Local Governance
Energy Sector TA and Strategy
Road Maintenance and Rehabilitation II
Programmatic Support to Health Sector
Operations Accessing Regional and Global Resources (TA and Investment)
FY09 Sustainable Energy Financing (GEF-PAS) Teachers’ Solar Lighting (GEF)
FY11 Climate-Proofing Infrastructure for Adaptation
(GFDRR)
Fast-Track Initiative Programmatic Support for
Basic Education
AAA (TA and ESW)
FY09 Climate Change Stocktaking Socioeconomic Survey of Roads Repair
FY10
Economic Note on Managing Resource-
Induced Volatility
Climate Change and Adaptation Strategy
Assessment of Universal Basic Education Plan
Health HR Payroll Assessment
Household Income and Expenditure Survey
Adolescent Girls Scoping Study
FY11
Public Expenditure Tracking Survey or
Sectoral PERs (arising from Economic Note) HIV/AIDS Population Bio-behavioral Survey
Political Economy Analysis of Local
Development Planning, Resource Allocation,
and Benefit Sharing
Poverty Reports derived from HIES
Integrated Review of Roads
IFC
FY08 PNG Microfinance Ltd.
Informal Economy Phase I
FY09
Regulatory Simplification and Investment Policy
and Promotion
Informal Economy Phase II
Digicel (telecommunications) investment I
Tourism Development (Pacific Regional): Identifying Barriers to tourism sector
development
FY10
IDA-IFC Risk-Sharing Facility: Finance for
SMEs (joint with IDA)
Special Economic Zone legislation,
regulation and policy
Tourism Development (Pacific Regional): Responding to sector impediments (investment
focus)
Digicel (telecommunications) investment II
ECOM (coffee) investment
KK Kingston (manufacturing and services)
investment
9
FY11
Public-Private Partnerships in Infrastructure:
Support to Special Economic Zone policy Potential investments in: telecommunications,
agribusiness, financial institutions,
manufacturing
Digicel distributor training
Agriculture supply chain finance
Mobile phone banking technology providers
ECOM coffee and cocoa farmer training
24. The sequencing of investment operations has been adjusted to ensure effective use of
available IDA funds taking account of implementation capacity and level of support within
GoPNG. Adjustments in the lending program are presented in Table 2 on the previous page.
25. At CAS mid-point, five projects are active: RMRP, Mining TA 2, SADP, and the
Sustainable Energy Financing Project (SEFP), a GEF-funded initiative which has recently been
restructured to dovetail with the smaller pilot Teachers Solar Lighting Project (TSLP). One
project is scheduled to be considered by the Board together with this Progress Report; the
Productive Partnerships in Agriculture Project (PPAP) will support productivity and market
access improvements for cocoa and coffee smallholder producers. The Urban Youth
Employment Project, which supports training and labor-intensive public works programs in Port
Moresby, is presented for consideration this month. The final project for FY10 is scheduled for
Board discussion in May: the Rural Communications Project will finance increased access in
rural areas to mobile telephony and to nurture broader, more competitively priced internet
coverage in rural areas.
26. A robust pipeline of investment projects are envisioned for preparation and appraisal in
FY2011. A follow-on transport sector project will build upon the accomplishments of the Roads
Maintenance and Rehabilitation Project as part of a series of infrastructure interventions aimed at
Box 3: Addressing the ‘Youth Challenge’ through the CAS Program
Young people under the age of 20 account for almost half of the PNG‟s total population, and they
constitute a disproportionate part of the urban poor. In Port Moresby, the largest city in PNG, youth
between the ages of 15 and 29 represent about 35 percent of the total population as compared to 28%
nationally; and it is estimated that the youth cohort will grow by at least another 13 percent by 2015
due to natural population increases and in-migration. In urban areas, many youth are living without
the traditional support of clan networks, at risk of alienation and poverty. The prospect of being
marginalized by their community or missing the rising tide of economic growth tops the list of fears
many youth express, and participation in raskol street crime (by young men) and sex exchanges for
cash (by young women) is reportedly growing. As past research has focused on young men, new Bank
analytical work is focusing on the challenges facing adolescent girls, to inform our interventions.
While there is considerable Government and donor commitment to „dealing with‟ youth-at-risk through
health and education programs, there is much less attention paid to disadvantaged youth, most of
whom have not completed school and lack the basic competencies or credentials required for the
workplace. The Urban Youth Employment Project will offer some of those youth a chance to become
economically active through a mix of skills training, personal viability training, and targeted labor-
intensive job opportunities, making a concerted effort to foster their social and economic integration
into mainstream society. A subset of PNG youth has the near-term potential to gain skilled
employment beyond public works, but they lack the credentials that would help them to differentiate
themselves in the labor market. The Second Chance Education (FODE) Project will work to improve
the quality of services offered through the Flexible Open and Distance Education program, ensuring
that more students complete a quality tutor-supported program and receive a recognized equivalency.
10
increasing reliable access for rural populations to markets and services. A new operation to
support community infrastructure development through block grants, with capacity building
support to provincial and district authorities, is in preparation. Strong support from GoPNG for a
small credit supporting improved access to Second Chance Education (FODE) will allow the
Bank to advance the first IDA credit for social sector work under this CAS, and may lead the
way toward further lending in support of human development priorities. The Government has
requested that the revised lending program should also accommodate consideration of three
projects not foreseen under the CAS. The IDA-IFC Risk Sharing Facility would expand access to
finance for SMEs; an Energy Sector Strategy project is being discussed to replace the Rural
Electrification operation, to help GoPNG develop a robust and comprehensive energy sector
strategy to support low-carbon choices; and a Oil and Gas Sector Governance Project, financing
technical assistance for the Department of Petroleum and Energy, is under consideration. Final
determination of which projects are financed through the remaining IDA15 resources and which
are prepared for consideration under the subsequent replenishment will be informed by the
ongoing improvements in dialogue with GoPNG and in portfolio performance.
28. The International Financial Corporation has sought to expand both investment and
advisory activities in PNG, whilst continuing to focus on a regional approach in its Pacific
engagement. Recent IFC investments have focused on telecommunications (Digicel PNG),
microfinance (PNG Microfinance Limited) and agribusiness (ECOM). Consistent with its Pacific
Initiative, IFC continues to explore opportunities for investment in and support to local PNG
businesses and foreign investors in the resources, finance, and service sectors. At the
Government‟s request, the Bank-IFC teams fielded a series of missions to identify and pre-
appraise a possible Risk Sharing Facility to help expand access for SMEs overall, which may
also support the growth of business and jobs through the near-term increase in economic
opportunities associated with the resources sector. The IFC‟s technical assistance activities in the
area of investment climate (business enabling environment) include drafting of national Special
Economic Zone legislation and regulations, as well as policy advice. IFC‟s engagements with
potential parties to public-private partnerships and access to finance are well-coordinated with
key donor parties including the ADB.
29. The FY2008-11 CAS is a joint strategy document, IDA and IFC staff are co-located in
Port Moresby and conduct joint staff meetings, and considerable progress has been made in
coordinating IDA and IFC operations through the joint field office.
30. MIGA‟s assistance in Papua New Guinea is limited to a single guarantee operation worth
US$76.6 million in gross exposure. The guarantee covers a portion of equity investment and a
loan by a syndicate of commercial lenders for the Lihir open-pit gold mine in New Ireland
province, which facilitated several hundred million US dollar foreign investment.
31. Portfolio performance was adversely affected by lengthy delays between Board approval
and signing of the Financing Agreements by the GoPNG, but most parameters are now
improving as the working relationship with key counterpart agencies is rebuilt and staff gain
experience. Disbursements were very low for the first 18 months of the CAS period, but have
since picked up; the disbursement ratio currently stands at 15.3 percent. Of the five active
investment projects (3 IDA/IBRD and 2 GEF), implementation status reports rated two
satisfactory or above as regards to development objectives and one as satisfactory as regards
11
implementation progress; there is now one problem project (SADP, rated Marginally
Unsatisfactory for both implementation progress and achievement of development objective1)
and no potential problem projects. Beginning in FY2011, portfolio reviews will identify cross-
cutting implementation issues and potential solutions; equally important, the Bank has begun a
program of fiduciary training and capacity building to support improved portfolio performance.
32. Efforts to rebuild the IDA portfolio in PNG have highlighted the loss in familiarity with
IDA systems amongst key GoPNG counterparts as a consequence of years of low program
activity. Therefore, new initiatives to rebuild capacity in fiduciary and implementation processes
were launched in the last half of FY2010. In addition to the overall unfamiliarity with Bank
systems, the authorities may have limited capacity to prepare projects in the period leading up to
and immediately following elections; the Bank will thus redouble efforts to accelerate
processing.
33. Although capacity across implementing partners is uneven and familiarity with IDA
systems is being rebuilt, the Bank has been able to selectively nurture innovations that represent
„cutting edge‟ development interventions well-contextualized for the PNG setting. For example,
the Rural Communications project uses a simple output-based aid model that takes advantage of
strong government interest and a rapidly modernizing regulatory and business environment in the
telecommunications sector to break new ground in increasing rural telecoms access.
34. In addition to investment operations, the Bank is pleased to be able to provide assistance
in building public sector and civil society capacity in support of the GoPNG Treasury decision to
progress towards implementation of EITI. Immediate support will include sponsoring attendance
at regional workshops, deploying specialized support in-country (shared with the Solomon
Islands who are also joining EITI), and fielding a mission to support preparation of a PNG
proposal to the EITI MDTF, once Government is ready to commence work.
35. The World Bank Group program in Papua New Guinea is complemented by a trust fund
portfolio of 19 trust funds totaling US$3.935 million. These trust funds provide targeted support
to project preparation, key analytical work (such as the HIV/AIDS Bio-behavioral survey) as
well as to the cost of increased international staffing presence in the World Bank Office Port
Moresby.
36. Harmonization and aid effectiveness are important priorities for all of PNG‟s major
development partners, and the Bank participates actively in the DP Roundtable, the Gender
Forum (co-chairing the Thematic Working Group on Women‟s Economic Empowerment), and
in key working groups under the GoPNG Committee on coordination and aid effectiveness. The
Bank works closely with Australia across its whole-of-government presence, with regular
consultations both in-country and in Canberra, and has strong partnerships with the Asian
Development Bank, NZAID, USAID, and the European Union. In consideration of the PNG
authorities‟ strong interest in learning from Asia‟s regional leaders for examples and lessons, the
Country Office is building a robust dialogue with regional development partners including Japan,
China, Indonesia, and Malaysia. The Bank supports the PNG United Nations agencies in their
1 In addition to the delays in project launch occasioned by a long gap between Board approval and GoPNG
signature, implementation of SADP has also been affected by the fact that it is currently the subject of a Request for
Inspection lodged in December 2009 with the World Bank‟s independent Inspection Panel.
12
“Delivering As One” program, sitting as a regular member of the UN Country Team and
consulting regularly with UNDP and specialized agencies on relevant sectoral initiatives.
37. At an operational level, new Bank-financed projects place an emphasis on moving
towards Government-led sector programs where possible; in sectors where pooled financing is
less advanced, Bank operations have been designed in close coordination with other partners to
support a common Government-defined strategy. For the remainder of the CAS period, the
potential community infrastructure project would complement interventions by AusAID and the
EU, while the design of the new transport project and possible energy strategy credit are framed
within the GoPNG sector dialogue process in close collaboration with ADB and AusAID.
38. During CAS implementation, the Bank has initiated new partnerships with the private
sector and civil society, including a new program of outreach events through the GDLN and the
PIC, and a „listening program‟ of lunchtime meetings led by the Country Manager. Alongside
these partnerships, the Bank frequently meets with business associations, civil society, and
academic organizations on issues related to Bank analytical work, project design and
implementation and key issues in policy dialogue. Indeed, this consultative base was used as the
foundation for gathering information for this CAS Progress Report: three simultaneous channels
of consultation were undertaken, each seeking to create opportunities for candid and substantive
feedback. Strategic conversations were conducted one-on-one by the Country Manager with key
GoPNG counterparts and development partners, and group meetings were facilitated by the
Country Office team with all current and prospective project implementing partners. At the
same time, the IDA Country Manager and the IFC Country Coordinator jointly chaired meetings
private sector representatives and business associations, and similar roundtable meetings were
held with civil society, research institutions, and think tanks. Finally, sectoral and task teams
conducted structured interviews about Bank performance with their project counterparts. The
results of all three „streams‟ of consultation were brought together at a professionally facilitated
workshop in December 2009, which underpinned this CAS Progress Report.
39. Significant potential is also seen in the World Bank Group‟s increasingly multi-
dimensional relationship with the PNG Sustainable Development Program (PNGSDP), the
independently governed trust that receives the majority share of revenues and dividends from the
Ok Tedi mine and allocates them for development interventions. Working together with GoPNG
and provincial governments, other stakeholders, and PNGSDP, the Bank Group has an
opportunity to leverage systemic changes in service delivery and livelihoods in rural areas. The
first such example was IFC‟s recent partnership with PNGSDP in PNG Microfinance. The
Bank‟s unique ability to work with and through government to strengthen mechanisms that can
be co-financed by PNGSDP well into the future offers an important opportunity to reverse the
historical decline in state effectiveness in PNG‟s poorest rural provinces. PNGSDP is currently
providing co-financing in the amount of approximately $10 million to SADP and $17 million to
RMRP. Substantial co-financing in the amount of $14 million (in addition to the $25 million
provided by the World Bank) is being provided to the PPAP by the International Fund for
Agriculture Development (IFAD).
40. The FY2008-11 CAS results framework has been revised, updated and streamlined, to
reflect adjustments in the lending and analytical work programs, implementation progress and
efforts to harmonize with the Government‟s new national strategic directions (see Annex B).
Milestones and indicators have been adjusted based on changes in timing of new projects and
13
progress in implementation. The updated Results Matrix is shorter and more realistic than the
original.
V. RISKS
41. The risks highlighted in the FY2008-11 CAS remain valid. These risks have materialized
to varying degrees and the Bank‟s program continues to support mitigation efforts. While overall
economic activity has remained robust during the global crisis, and the 2008 fall in commodity
prices was well-managed through the medium-term fiscal and debt strategies, the 2009 budget
implementation and the 2010 budget plans signal both inflationary pressures and a softening of
the commitment to reduced public debt. Mindful of the limited appetite for policy dialogue on
public expenditures, the Bank will continue to use all opportunities with Government to provide
neutral and empirically-based advice on managing resource-induced volatility.
42. The country has not experienced heightened political conflict, and currently enjoys stable
governance. The remaining CAS period includes the lead up to elections in 2012 as well as a
period of fiscal challenge as revenues lag expenditures (mining output drops and LNG is still
under construction). This dynamic could lead to a decline in the governance environment, and
the Bank will continue to mitigate this risk by focusing on improved transparency and
accountability in extractive industries.
43. The disconnect between ambitious expectations around LNG-led jobs and the reality of
growing unemployment, especially among urban youth, may lead to increased criminal activity
and deteriorating social stability. Evidence of these dynamics has grown in late 2009 and early
2010, and while Bank projects support employment opportunities in Port Moresby, increasing
violence is already manifest in second-tier cities. The Bank will intensify efforts to identify
investments to improve livelihoods.
44. Natural disasters continue to pose a risk of significant economic disruption and social
dislocation, and the CAS will seek to increase the profile within GoPNG (currently focused on
carbon finance) for participation in regional disaster risk reduction initiatives. Perhaps equal in
possible impact to natural disasters is the risk from HIV/AIDS; early indications for sentinel sites
are that PNG is potentially among the highest risk countries in the world; the bio-behavioral
study that the Bank is leading will obtain more information on this risk.
45. Lack of ownership for broad-based public expenditure reform and lack of support for
Bank engagement with national oversight agencies stalled progress on related CAS initiatives.
As noted above, PNG‟s progress in improving the investment climate has been mixed, and
PNG‟s Doing Business has fallen behind that of more rapid reformers. Failure to arrest this
decline and make more substantial progress on the investment climate will jeopardize IFC‟s
ability to realize the goals described above and in Annex B, and limit the potential benefits of
private investment on the development of PNG more broadly. The Bank will continue to work
with other development partners and with champions in GoPNG to build broad-based
constituencies for change, reaching out to civil society and the media by helping them access
information. The Bank can only be effective if the approach is a long-term engagement
characterized by respect, persistence, and dialogue. Weaknesses in fiduciary systems also impede
implementation, and success will depend on strengthening GoPNG‟s capacity to apply and
monitor fiduciary guidelines.
14
46. Efforts to promote closer coordination between the Government and development
partners have yielded some results, notably through the 2008 collective agreement on a localized
aid effectiveness compact (the Kavieng Declaration), but momentum has slowed since signature.
The Bank will continue to communicate the importance of harmonization, and will seek to
increase collaborative efforts with other development partners.
15
Annex A: Country at a Glance
Papua East
Key D evelo pment Indicato rs New Asia & Low
Guinea Pacific income
(2008)
Population, mid-year (millions) 6.6 1,912 1,296
Surface area (thousand sq. km) 463 16,299 21,846
Population growth (%) 2.4 0.8 2.2
Urban population (% of to tal population) 13 43 32
GNI (Atlas method, US$ billions) 6.8 4,173 744
GNI per capita (Atlas method, US$) 1,040 2,182 574
GNI per capita (PPP, international $) 1,870 4,969 1,489
GDP growth (%) 6.6 11.4 6.4
GDP per capita growth (%) 4.1 10.5 4.2
(mo st recent est imate, 2003–2008)
Poverty headcount ratio at $1.25 a day (PPP, %) 36 a 17 ..
Poverty headcount ratio at $2.00 a day (PPP, %) 57 a 39 ..
Life expectancy at birth (years) 57 72 57
Infant mortality (per 1,000 live births) 50 22 80
Child malnutrition (% of children under 5) .. 13 28
Adult literacy, male (% of ages 15 and o lder) 62 96 72
Adult literacy, female (% of ages 15 and o lder) 53 90 55
Gross primary enro llment, male (% of age group) 60 111 100
Gross primary enro llment, female (% of age group) 50 109 89
Access to an improved water source (% of population) 40 87 68
Access to improved sanitation facilities (% of population) 45 66 39
N et A id F lo ws 1980 1990 2000 2008 b
(US$ millions)
Net ODA and official aid 326 412 275 317
Top 3 donors (in 2007):
Australia 276 262 198 281
European Commission 0 45 1 20
New Zealand 2 3 7 13
Aid (% of GNI) 13.1 13.3 8.3 5.5
Aid per capita (US$) 102 100 51 49
Lo ng-T erm Eco no mic T rends
Consumer prices (annual % change) 12.1 7.0 15.6 10.8
GDP implicit deflator (annual % change) 7.1 4.1 13.1 11.6
Exchange rate (annual average, local per US$) 0.7 1.0 2.8 2.7
Terms of trade index (2000 = 100) .. 80 100 159
1980–90 1990–2000 2000–08
Population, mid-year (millions) 3.2 4.1 5.4 6.6 2.6 2.7 2.5
GDP (US$ millions) 2,546 3,220 3,521 8,239 1.9 3.8 2.9
Agriculture 35.4 30.9 35.8 33.6 1.8 4.5 1.9
Industry 28.7 32.4 41.4 47.9 1.9 5.4 3.8
M anufacturing 10.2 9.6 7.5 5.6 0.1 4.6 3.7
Services 35.9 36.8 22.8 18.4 2.0 -0.6 3.5
Household final consumption expenditure 60.9 59.0 44.6 58.2 0.4 3.4 0.4
General gov't final consumption expenditure 24.1 24.8 16.6 10.0 -0.1 2.5 1.1
Gross capital formation 25.2 24.4 21.9 19.4 -0.9 1.9 -1.1
Exports of goods and services 43.2 40.6 66.2 72.5 3.3 5.1 6.3
Imports o f goods and services 53.3 48.9 49.2 60.1 -1.3 3.4 6.3
Gross savings .. .. .. ..
Note: Figures in italics are for years other than those specified. 2008 data are preliminary. .. indicates data are not available.
a. Country poverty estimate is for earlier period. b. A id data are for 2007.
Development Economics, Development Data Group (DECDG).
(average annual growth %)
(% of GDP)
10 5 0 5 10
0-4
15-19
30-34
45-49
60-64
75-79
percent of total population
Age distribution, 2007
Male Female
0
10
20
30
40
50
60
70
80
90
100
1990 1995 2000 2007
Papua New Guinea East Asia & Pacific
Under-5 mortality rate (per 1,000)
-10
-5
0
5
10
15
20
95 05
GDP GDP per capita
Growth of GDP and GDP per capita (%)
16
Annex A: Country at a Glance, continued
B alance o f P ayments and T rade 2000 2008
(US$ millions)
Total merchandise exports (fob) 2,215 5,397
Total merchandise imports (cif) 1,491 3,794
Net trade in goods and services 339 488
Current account balance 300 228
as a % of GDP 8.5 2.8
Workers' remittances and
compensation of employees (receipts) 7 13
Reserves, including gold 304 2,745
C entral Go vernment F inance
(% of GDP)
Current revenue (including grants) 30.5 32.6
Tax revenue 23.8 26.9
Current expenditure 23.5 18.3
T echno lo gy and Infrastructure 2000 2007
Overall surplus/deficit -1.1 4.4
Paved roads (% of to tal) 3.5 ..
Highest marginal tax rate (%) Fixed line and mobile phone
Individual 47 47 subscribers (per 100 people) 1 6
Corporate 25 25 High technology exports
(% of manufactured exports) 20.2 67.1
External D ebt and R eso urce F lo ws
Enviro nment
(US$ millions)
Total debt outstanding and disbursed 2,556 1,418 Agricultural land (% of land area) 2 2
Total debt service 304 974 Forest area (% of land area) 66.5 65.0
Debt relief (HIPC, M DRI) – – Nationally protected areas (% of land area) .. 8.0
Total debt (% of GDP) 72.6 17.2 Freshwater resources per capita (cu. meters) 141,535 126,658
Total debt service (% of exports) 12.2 14.8 Freshwater withdrawal (billion cubic meters) 0.1 ..
Foreign direct investment (net inflows) 96 -30 CO2 emissions per capita (mt) 0.50 0.73
Portfo lio equity (net inflows) .. ..
GDP per unit o f energy use
(2005 PPP $ per kg of o il equivalent) .. ..
Energy use per capita (kg of o il equivalent) .. ..
Wo rld B ank Gro up po rtfo lio 2000 2008
(US$ millions)
IBRD
Total debt outstanding and disbursed 244 158
Disbursements 43 4
Principal repayments 29 30
Interest payments 15 9
IDA
Total debt outstanding and disbursed 92 72
Disbursements 0 2
P rivate Secto r D evelo pment 2000 2008 Total debt service 3 4
Time required to start a business (days) – 56 IFC (fiscal year)
Cost to start a business (% of GNI per capita) – 23.6 Total disbursed and outstanding portfo lio 0 1
Time required to register property (days) – 72 o f which IFC own account 0 1
Disbursements for IFC own account 0 1
Ranked as a major constraint to business 2000 2007 Portfo lio sales, prepayments and
(% of managers surveyed who agreed) repayments for IFC own account 0 0
n.a. .. ..
n.a. .. .. M IGA
Gross exposure 47 0
Stock market capitalization (% of GDP) 49.3 118.3 New guarantees 0 0
Bank capital to asset ratio (%) .. ..
Note: Figures in italics are for years other than those specified. 2008 data are preliminary.
.. indicates data are not available. – indicates observation is not applicable.
Development Economics, Development Data Group (DECDG).
0 25 50 75 100
Control of corruption
Rule of law
Regulatory quality
Political stability
Voice and accountability
Country's percentile rank (0-100)higher values imply better ratings
2007
2000
Governance indicators, 2000 and 2007
Source: Kaufmann-Kraay-Mastruzzi, World Bank
IBRD, 183IDA, 73
IMF, 0
Other multi-lateral, 493
Bilateral, 335
Private, 1,040
Short-term, 91
Composition of total external debt, 2007
US$ millions
17
Annex A: Country at a Glance, Millennium Development Goals
With selected targets to achieve between 1990 and 2015(estimate closest to date shown, +/- 2 years)
Go al 1: halve the rates fo r extreme po verty and malnutrit io n 1990 1995 2000 2007
Poverty headcount ratio at $1.25 a day (PPP, % of population) .. 35.8 .. ..
Poverty headcount ratio at national poverty line (% of population) .. 37.5 .. ..
Share of income or consumption to the poorest qunitile (%) .. 4.5 .. ..
Prevalence of malnutrition (% of children under 5) .. .. .. ..
Go al 2: ensure that children are able to co mplete primary scho o ling
Primary school enro llment (net, %) 66 .. .. ..
Primary completion rate (% of relevant age group) 48 52 .. ..
Secondary school enro llment (gross, %) 11 13 .. ..
Youth literacy rate (% of people ages 15-24) .. .. 67 64
Go al 3: e liminate gender disparity in educat io n and empo wer wo men
Ratio of girls to boys in primary and secondary education (%) 80 .. .. ..
Women employed in the nonagricultural sector (% of nonagricultural employment) 28 .. 32 ..
Proportion of seats held by women in national parliament (%) 0 0 2 1
Go al 4: reduce under-5 mo rtality by two -thirds
Under-5 mortality rate (per 1,000) 94 84 76 65
Infant mortality rate (per 1,000 live births) 69 62 57 50
M easles immunization (proportion of one-year o lds immunized, %) 67 42 62 58
Go al 5: reduce maternal mo rtality by three-fo urths
M aternal mortality ratio (modeled estimate, per 100,000 live births) .. .. .. 470
B irths attended by skilled health staff (% of to tal) .. 53 41 42
Contraceptive prevalence (% of women ages 15-49) .. 26 .. ..
Go al 6: halt and begin to reverse the spread o f H IV/ A ID S and o ther majo r diseases
Prevalence of HIV (% of population ages 15-49) .. 0.1 0.3 1.5
Incidence of tuberculosis (per 100,000 people) 250 250 250 250
Tuberculosis cases detected under DOTS (%) .. 1 7 15
Go al 7: halve the pro po rt io n o f peo ple witho ut sustainable access to basic needs
Access to an improved water source (% of population) 39 39 39 40
Access to improved sanitation facilities (% of population) 44 44 44 45
Forest area (% of to tal land area) 69.6 68.1 66.5 65.0
Nationally protected areas (% of to tal land area) .. .. .. 8.0
CO2 emissions (metric tons per capita) 0.6 0.5 0.5 0.7
GDP per unit o f energy use (constant 2005 PPP $ per kg of o il equivalent) .. .. .. ..
Go al 8: develo p a glo bal partnership fo r develo pment
Telephone mainlines (per 100 people) 0.7 0.9 1.2 0.9
M obile phone subscribers (per 100 people) 0.0 0.0 0.2 4.7
Internet users (per 100 people) 0.0 0.0 0.8 1.8
Personal computers (per 100 people) .. .. 5.2 6.4
Note: Figures in italics are for years other than those specified. .. indicates data are not available.
Development Economics, Development Data Group (DECDG).
P apua N ew Guinea
0
25
2000 2002 2004 2006 2007
Primary net enrollment ratio (..)
Ratio of girls to boys in primary & secondary education (..)
Education indicators (%)
0
10
2000 2002 2004 2006 2007
Fixed + mobile subscribers
Internet users
ICT indicators (per 100 people)
0
25
50
75
100
1990 1995 2000 2007
Papua New Guinea East Asia & Pacific
Measles immunization (% of 1-year olds)
18
Annex B: Papua New Guinea CAS 2008-2011, Revised Results Matrix
Longer-Term Development Agenda for PNG Expected Contribution of the CAS to National Development Results Partnerships
Strategic and
Longer-Term
Country Outcomes
Major Challenges to
Achieving Development
Outcomes
CAS Outcomes and Outcome-
Level Indicators1
Intermediate Indicators of
Progress toward CAS
Outcomes
WBG
Interventions
to Support
Outcomes
Development
Partners
PILLAR I: PROMOTING AND MAINTAINING SOUND ECONOMIC AND NATURAL RESOURCE MANAGEMENT
Promote sound
macroeconomic and
public expenditure
management
“Strengthen public
expenditure
management through
ensuring fiscal
sustainability, strategic
prioritization of
available resources,
and cost-effective
implementation of
programs (MTDS p.
33)
Vulnerability to
commodity price swings Low to moderate risk of
debt distress
GoPNG shows continued
awareness of the importance
of maintaining fiscal
discipline and a stable macro-
economic environment
Inflation in lower single digits
(Baseline: 2.3% in 2006) Increased international
reserves (Baseline: US$ 1.4
billion at end-2006) Reduced public debt burden
(Baseline: 39% public debt to
GDP in 2006)
Regular monitoring of
macroeconomic management,
and engagement with GoPNG
when there are slippages
Completed:
PERR
New AAA:
Economic Note;
possible PER
ADB AusAID–ECP IMF
1 CAS outcomes are those to which the World Bank expects to influence directly through its interventions. Achievement of these outcomes will be measured by listed
outcome-level indicators.
19
2
An
nex
B9
Strategic and
Longer-Term
Country Outcomes
Major Challenges to
Achieving Development
Outcomes
CAS Outcomes and Outcome-
Level Indicators1
Intermediate Indicators of
Progress toward CAS
Outcomes
WBG
Interventions
to Support
Outcomes
Development
Partners
Promote good
governance through
independent and
capable oversight
institutions and
improved citizen
monitoring
“Support strengthening
of „watchdog‟ and
legal oversight bodies,
to improve efforts to
detect and prosecute
fraud and corruption in
government.” (MTDS
p. 54)
Insufficient human and
financial resources
devoted to oversight
Effectiveness of citizen
monitoring hampered by
limited availability of
accessible budget/audit
information, especially at
community level, and by
lack of transparency in
use of extractive industry
royalties/grants by sub-
national governments
Expanded and stronger multi-
stakeholder mechanisms to
review overall policymaking
and extractive industries
GoPNG joins with civil
society and industry to form
multi-stakeholder structures for
PNG to join and implement
EITI Increased public availability
of accessible information to
support monitoring of
government performance
Media, NGOs, and CBOs are
using and analyzing factual
information from audit reports,
sub-national and national
budget documents – evidenced
by press coverage
Cabinet-level discussion and
adoption of discussion paper
signaling GoPNG intent to
join EITI MDTF grants approved and
underway to support GoPNG
and civil society in moving
forward under EITI candidate
status
Capacity building program
underway to support civil
society and GoPNG in
reporting and analysis
required for EITI audits
Media publishes regular
features on deliberations of
the Public Accounts
Committee
Completed:
PERR
Ongoing:
New AAA:
possible overall
or sectoral PER
New TA:
possible EITI
MDTF grants
ADB AusAID–ECP IMF
EITI
Secretariat Private sector NGOs
Promote strong, well
governed, sustainable
extractive industries
offering significant
benefits at local and
national levels
“Transform the non-
renewable income
stream from mining
and petroleum into…
Incomplete institutional
framework in mining and
petroleum sectors
Strengthened institutional
structures in mining sector,
emphasizing transparent
management and resource
distribution
Mineral Resources Authority
operating effectively, with
clearly defined governance
arrangements; Bougainville
Dept. of Mines operational
Mineral Resource Authority
internal management
procedures established and
staff trained
Bougainville Division of
Ongoing:
Women in
Mining
New Lending:
Mining TA 2;
possible Oil-Gas
Sector
ADB AusAID EU Japan PNGSDP
Private sector
20
Strategic and
Longer-Term
Country Outcomes
Major Challenges to
Achieving Development
Outcomes
CAS Outcomes and Outcome-
Level Indicators1
Intermediate Indicators of
Progress toward CAS
Outcomes
WBG
Interventions
to Support
Outcomes
Development
Partners
sustainable income…”
(MTDS p. 16)
Country Indicator:
Commercial use of
natural resources
increased through
environmentally
friendly technologies
by 2020 (MDG #7)
Lack of exploration due
to high cost and limited
information, despite high
mineral potential in some
areas
Missed opportunities
for revenue collection
from existing mining and
petroleum operations
Increased annual spending on
mining/petroleum exploration,
including in Bougainville
(Baseline: US$ 50m in 2007)
3 additional tax audits of EI
companies completed by
Internal Revenue Commission
(Baseline: 2 as of 2007)
Mines established Geological database
completed and available to
investors
Capacity building of Internal
Revenue Commission
underway
Governance TA
Promote effective
and sustainable
management of
natural resources “Sustainable
development is…an
explicit objective.”
(MTDS p. 44)
Country Indicator: Implement principles
of sustainable
development by 2010-
15 (MDG #7)
Inadequate attention to
climate change impacts
on sustainable
development
Inadequate enabling
environment and SME
capacity to access
inclusive and
employment-intensive
multiplier effects from
enclave development
Strategic framework for
disaster risk management and
climate change adaptation /
mitigation adopted by
GoPNG, investment program
supported by partners
Improved attention to disaster
risk management in climate-
change strategy
Program in place to leverage
enclave revenues for broader
growth and employment Increased availability of
credit for SMEs (Baseline TBD,
data disaggregated by gender)
Climate Change Stocktaking
completed, contributing to
GoPNG‟s prep for COP15 Agreed approach with
DMPGHM on adaptation and
disaster risk management Strategic Plan on climate
resilience prepared Minimum of two PNG
financial institutions
expanding lending to SMEs Targeted outreach to women
SME owners results in
expanded share of SME
lending to women-owned
businesses
New Lending:
GEF-PAS; TA Pilot
Program on
Climate
Resilience
(PPCR) New AAA:
Climate Change
Framework and
Stocktaking
AusAID EC NZAID GEF NGOs
PILLAR II: IMPROVING LIVELIHOODS AND SERVICE DELIVERY, ESPECIALLY FOR THE RURAL POOR
Promote the ability of
the private sector to
provide significant
Stronger business enabling
environment, with improved
financial infrastructure
Improved business
registration and licensing
Ongoing: IFC
investment in
PNG Micro-
ADB AusAID
21
Strategic and
Longer-Term
Country Outcomes
Major Challenges to
Achieving Development
Outcomes
CAS Outcomes and Outcome-
Level Indicators1
Intermediate Indicators of
Progress toward CAS
Outcomes
WBG
Interventions
to Support
Outcomes
Development
Partners
employment and
livelihood
opportunities
“Trigger the private
sector…to become
productively engaged
in growing the
economy, by
harnessing the
entrepreneurial spirit.”
(MTDS p. i)
Cumbersome business
registration processes Very large informal
sector (80% of workers) Underdeveloped
financial infrastructure
and limited access to
credit, especially for
MSMEs
Underdeveloped
tourism assets
Failing infrastructure
and underperforming
state-owned enterprises
Business regulations
simplified (Baseline: 56 days in
2007)
Growth in number of MSMEs
in formal sector, as measured
by active registered MSMEs
paying taxes (Baseline: 12,740
in 2009) Improved potential in niche
industries, including tourism
Increased tourism measured
by new investments and visitors
(Baselines: investment data
TBD; 17,000 visitors 2005) Public-private partnerships
supporting infrastructure New PPPs established
(Baseline: 0 PPPs under
development in 2007)
procedures introduced
National policy on informal
economy development and
integration formulated
PNG Microfinance Ltd.
operational, with 3-year
institution-building program
underway
Barriers to tourism
investment identified
Development of Special
Economic Zone policy
supports new fisheries
industrial park
finance Ltd. New Lending/
Investments:
IDA-IFC
Risk-Sharing
Facility;
Possible IFC
initiatives in:
manufacturing;
renewable
energy and
agribusiness.
New AAA:
IFC and WBG
ICAS:
Doing Business;
informal sector;
financial infra;
tourism
ADB
EIB
Improve livelihoods
through policies and
investments that
promote inclusive
and sustainable
growth
Inadequate agricultural
extension services limit
agricultural productivity
Sustainable increases in oil
palm production and
artisanal and small-scale
mining (ASM)
Increased smallholder income
from oil palm production in Oro
and West New Britain
Increased palm oil
production through improved
extension services and road
Ongoing: ASM
(JSDF); Women
in Mining
(JSDF)
New Lending:
AusAID EC NZAID PNGSDP NGOs Private sector
organizations
22
An
nex
B9
2
Strategic and
Longer-Term
Country Outcomes
Major Challenges to
Achieving Development
Outcomes
CAS Outcomes and Outcome-
Level Indicators1
Intermediate Indicators of
Progress toward CAS
Outcomes
WBG
Interventions
to Support
Outcomes
Development
Partners
“Directly promote
economic growth in
PNG‟s renewable
resources sector.”
(MTDS p. 36)
Country Indicator: Increase agriculture
production by 10%
and subsistence
agriculture by 34% by
2015 (MDG #1)
and sustainability
Harmful impacts of
ASM offset income and
employment benefits for
miners and their families
Insufficient information
on poverty and rural
sources of growth
(Baseline: 2006 smallholder oil
palm income in project areas =
approximately K75.1 million)
Increased ASM employment
and incomes, as measured by
Small Scale Mining Association
(Baseline: preliminary estimate
is 100,000 as of 2008) Increased access for urban
youth to skills training and
daily employment schemes
(Baseline: existing (non-UYEP)
public works job placements =
485 per year, 2009 data) Development Partners and
GoPNG use updated data on
poverty and living standards for
policy and program design
access for smallholders
ASM training, capacity
building, and extension
services expanded to 3
additional communities, with
increased support to women
and youth
Labor-intensive employment
and skills development
activities underway in Port
Moresby
National household income
and expenditure survey
launched and data available
for analysis
SADP
Mining TA 2
UYEP
New AAA:
HIES
Support the
development of more
responsive,
accountable local
governments that
deliver cost-effective
public services based
on community needs
“Significantly improve
the quality of life of
PNG‟s rural majority,
especially by
improving services…”
Poorly performing sub-
national government
institutions and under-
resourcing of frontline
services
Poor communication/
collaboration between
state and non-state actors
limits accountability
Limited incidence of
communities of interest
that transcend traditional
Improved local service
delivery partnerships between
government and civil society,
within and across
communities Local service delivery in pilot
areas increased, as measured by
project-level indicators (e.g.
infrastructure, social services)
Civil society partnerships
(including women‟s
associations) established in
targeted communities, in
piloting of at least one
alternative model of
community-led service
delivery agreed by
Government and incorporated
into a Bank-supported project
Joint meetings conducted
between local and national
women‟s associations, and
local governments in mining
areas
Ongoing:
Women in
Mining; TKY
New Grants: Women in
Bougainville;
PNGSDP pilot
New Lending:
SADP; UYEP;
RSDLG
New AAA:
Equitable
ADB AusAID UN NZAID EU
Private sector
Local and
international
NGOs
23
Strategic and
Longer-Term
Country Outcomes
Major Challenges to
Achieving Development
Outcomes
CAS Outcomes and Outcome-
Level Indicators1
Intermediate Indicators of
Progress toward CAS
Outcomes
WBG
Interventions
to Support
Outcomes
Development
Partners
(MTDS pp. 30-31) social groups collaboration with local
governments Benefit Sharing
Help develop well-
managed national
and local transport
services
“By linking markets
and reducing costs,
maintenance and
rehabilitation
programs for roads,
wharves and airstrips
will be a powerful
force for economic
development,
particularly in rural
Papua New Guinea.”
(MTDS p. 36)
Lack of reliable sector
data
Poor quality of roads
due to insufficient
maintenance
Declining planning and
project management
capacity
Improved condition of roads/
bridges in selected provinces
Increased % of national roads
rehabilitated and maintained to
“fair” or better condition in
RMRP provinces (Baseline:
20% in 2002) Improved condition of access
roads, measured by a decrease
in annual crop losses (Baseline:
16% loss in 2006)
Increased private sector
contracting of road maintenance
measured by % of competitive
bid contracts in RMRP
provinces (Baseline: 40% 2002)
Wider adoption of the Road
and Bridge Asset
Maintenance systems to
maintain up-to-date records
and plan future works Reconstruction and
maintenance of provincial
access roads in Oro province
Training and support
program for small and
medium-sized private
contractors in place
Ongoing:
RMRP;
New Lending:
Oro Province
Reconstruction
RMRP II;
SADP
New AAA:
ADB
AusAID
PNGSDP
Expand access to
reliable, affordable
electricity to support
service delivery and
enterprise
development
“Improve basic
services such as
electricity…” (MTDS
p. 31)
Absence of appropriate
strategy for rural
electrification High cost and limited
availability of fuel,
especially in remote areas
Improved availability and
lower cost of electricity
services in selected rural
centers and towns
Significant increase in share
of households, schools and
health services connected to the
grid (Baselines: 7% in 2007,
25% in 2000, and 62% in 1999)
Plan for energy sector
strategy to be developed
based on technical assistance
and following wide
consultation, providing base
for investments in low-carbon
rural and urban investments
Ongoing: TSLP
(GEF)
New Lending:
Energy Strategy
and TA (IDA)
New AAA:
ADB AusAID EIB Japan PNGSDP PNGSEL
24
Strategic and
Longer-Term
Country Outcomes
Major Challenges to
Achieving Development
Outcomes
CAS Outcomes and Outcome-
Level Indicators1
Intermediate Indicators of
Progress toward CAS
Outcomes
WBG
Interventions
to Support
Outcomes
Development
Partners
Facilitate provision
of reliable, affordable
access to
telecommunications
infrastructure and
services “Foster the expansion
of nation-wide tele-
communications
system through
development of a
sound policy,
regulatory and
institutional
framework.” (MTDS
p. V)
Inconsistent policy
direction
Inadequate coordination
and fragmented
responsibilities among
GoPNG institutions Monopolistic market
structures in all sectors
(fixed, mobile,
international gateway)
Expanded access to
affordable, reliable
telecommunications in rural
areas and outside POM
Teledensity increased by 10%
(Baseline: 3% in 2007)
At least one public payphone
per 500 people providing basic
services in towns >1,000 people
in targeted provinces
Average user cost of basic
telecom services decreased by
10%, as measured by cost of 3-
min local calls (mobile) and 60-
min Internet access (Baselines:
3.6PGK and 15PGK, end-2009)
Rural communication policy
adopted and implementation
launched PPP-based rural telecom
access program designed and
launched in at least 2
provinces
Competition in basic
telecom services introduced:
at least 2 mobile operators
active by 2009
Completed:
Rural Telecom
Options Study
New Lending:
Rural
Communi-
cations;
IFC investment
in telecom
sector
New AAA:
WBG Pacific
Regional
Telecommuni-
cations Impact
Study
PNGSDP
Improve human
development
outcomes across PNG
“Empowering Papua
New Guineans…
through basic
education and primary
health care will…
directly improve living
standards [and]
promote economic
Limited progress on
universal basic education Low primary retention Insufficient baseline
data against which to
measure performance
Increased resources
supporting higher primary
school participation and
grade retention Higher GoPNG budget
allocations and increased multi-
donor support for universal
basic education
Priority education policies
in place and costed
Administrative data in use
on selected effectiveness
indicators
New Lending:
Possible
programmatic
support to
health and basic
education
ADB AusAID China EU GFATM JICA NZAID UK UNDP UNFPA UNICEF
25
Strategic and
Longer-Term
Country Outcomes
Major Challenges to
Achieving Development
Outcomes
CAS Outcomes and Outcome-
Level Indicators1
Intermediate Indicators of
Progress toward CAS
Outcomes
WBG
Interventions
to Support
Outcomes
Development
Partners
growth.” (MTDS p.
11)
Country Indicators:
Primary gross
enrollment inc to 85%
by 2015 (MDG #2) Primary cohort
retention up to 70% by
2015 (MDG #2) IMR reduced to 44
per 1,000 (MDG #4) Spread of HIV/AIDS
controlled by 2015
(MDG #6)
Stalled health outcomes,
including low
immunization rates and
high infant and maternal
mortality
Insufficient data on HIV
prevalence, trends, and
transmission patterns
Improved evidence base for
health sector policies and
plans 2011 NDoH evidence-based
budget submission successfully
leverages increased resources in
recurrent budget More effective national
HIV/AIDS response through
evidence-based policy and
interventions
Information on extent/nature
of HIV/AIDS available to
support GoPNG and donor
interventions
Stronger evidence base
for health sector resource
management
Improved distribution and
allocation of human
resources for health
National HIV/AIDS
population bio-behavioral
survey designed and launched
New AAA:
Basic Education
(FTI);
Health HR
Payroll Review
Health Sector
Fiscal Space
Analysis
HIV/AIDS
Population Bio-
Behavioral
survey (IBBS)
USAID WHO
National and
international
NGOs
26
Annex C: Selected Indicators* of Bank Portfolio Performance and Management
Indicator 2007 2008 2009 2010
Portfolio Assessment
Number of Projects Under Implementation a 2 3 3 3
Average Implementation Period (years) b 6.3 2.2 3.2 3.8
Percent of Problem Projects by Number a, c 0.0 0.0 33.3 33.3
Percent of Problem Projects by Amount a, c 0.0 0.0 14.0 22.6
Percent of Projects at Risk by Number a, d 50.0 33.3 33.3 33.3
Percent of Projects at Risk by Amount a, d 75.4 63.5 14.0 22.6
Disbursement Ratio (%) e 72.9 3.0 13.7 15.3
Portfolio Management
CPPR during the year (yes/no)
Supervision Resources (total US$)
Average Supervision (US$/project)
Memorandum Item Since FY 80 Last Five FYs
Proj Eval by OED by Number 34 2
Proj Eval by OED by Amt (US$ millions) 682.6 17.0
% of OED Projects Rated U or HU by Number 48.5 0.0
% of OED Projects Rated U or HU by Amt 43.2 0.0
a. As shown in the Annual Report on Portfolio Performance (except for current FY).
b. Average age of projects in the Bank's country portfolio.
c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP).
d. As defined under the Portfolio Improvement Program.
e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the
beginning of the year: Investment projects only.
* All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio,
which includes all active projects as well as projects which exited during the fiscal year.
27
Annex D: IBRD/IDA Program Summary
Proposed IBRD/IDA Base-Case Lending Program
Fiscal year Proj ID US$(M) SMU
2010 Rural Communications Project 15 CITPO
Urban Youth Employment Project 13.5 SD
Productive Partnerships in Agriculture 25 SD
Result 53.5
2011 Flexible and Open Distance Education 5 HD
SME Access to Finance Project 20.5 FP
National Rural Electrif ication 7.5 SD
Rural Service Delivery & Local Governance* 25 SD
Transport Sector Project (RMRP II)* 25 SD
Health Sector Reform* 9.5 HD
Result 67.5
Overall Result 121
* These five proposed IDA credits are under consideration for either the remainder of IDA15 or for funding
under the successor replenishment. Precise decisions on prioritizing these within the overall lending
envelope will be made before December 2010 in consultation with GoPNG based on their still-pending
elaboration of the new five-year development plan.
28
Annex E: IFC Investment Operations Program
2007 2008 2009 2010*
Commitments (US$m)
Gross 0.00 40.00 4.00 80.18
Net** 0.00 40.00 4.00 80.18
Net Commitments by Sector
Telecommunications 0.00 40.00 0.00 80.00
Microfinance 0.00 0.00 0.00 0.18
Private Equity Funds 0.00 0.00 4.00 0.00
Total 0.00 40.00 4.00 80.18
Net Commitments by Investment Instrument
Equity 0.00 0.00 4.00 0.18
Loan 0.00 40.00 0.00 80.00
Total 0.00 40.00 4.00 80.18
* As of February 28, 2010
** On IFC’s own account
29
Annex F: Summary of Non-lending Services
Product Completion FY Cost (US$000)
Recent completions
Country Procurement Assessment Report 2007 162
Communications Sector Review 2008 257
CDD Stocktaking and Roadmap 2008 174
Framework for Extractive Industries Governance 2010 110
Ongoing
Climate Change Strategy 2010 177
Urban Youth Empowerment Studies (EAAIG) 2010 220
Economic Report on Managing Volatility 2010 150
Human Resources for Health - Operational Review 2010 85
Resource Distribution and Benefit Sharing Research (EAPJ4P) 2011 100
HIV/AIDS Population Bio-behavioral Survey (GAIDS) 2011 125
Poverty Reports/HIES Phase II 2011 271
Planned
Assessment of Universal Basic Education Plan 2010
Adolescent Girls’ Scoping Study 2010
Crime and Violence Study 2011
Recipient Executed Trust Fund Grants - Ongoing
Energizing the Pacific - PNG 2010 1,000
Teachers' Solar Lighting 2010 992
30
Annex G: Operations Portfolio (IBRD/IDA and Grants)
Closed Projects 43
IBRD/IDA *
Total Disbursed (Active) 55.43
of w hich has been repaid 3.79
Total Disbursed (Closed) 785.22
of w hich has been repaid 603.83
Total Disbursed (Active + Closed) 840.65
of w hich has been repaid 607.62
Total Undisbursed (Active) 65.57
Total Undisbursed (Closed) 0.00
Total Undisbursed (Active + Closed) 65.57
Active Projects
Project ID Project NameDevelopment
Objectives
Implementation
ProgressFiscal Year IBRD IDA GRANT Cancel. Undisb. Orig. Frm Rev'd
P102396 Mining Sector Inst Strengthening TA 2 MS MS 2008 17 15.15777
P004397 Road Maintenance and Rehabilitation Project S S 2002 40 37.31 23.04812 -15.5614 15.1986
P079140 Smallholder Agriculture Development Project MU MU 2008 27.5 27.36399 1.264
Overall Result 40 81.81 65.56987 -15.4044 15.1986
Original Amount in US$ Millions Disbursements a/
Difference Between
Expected and Actual
Supervision Rating
Last PSR
31
Annex H: IFC Committed and Disbursed Outstanding Investment Portfolio
(In USD Millions)
Committed Disbursed Outstanding
FY Approval Company Loan Equity
**Quasi
Equity *GT/RM
Partici
pant Loan Equity
**Quasi
Equity *GT/RM
Partici
pant
2010 Digicel PNG 80 0 0 0 0 80 0 0 0 0
2009 Kula Fund ii 0 3.34 0 0 0 0 1.48 0 0 0
2005/10 PNG Microfinance 0 0.4 0 0 0 0 0.22 0 0 0
Total Portfolio: 80 3.74 0 0 0 80 1.7 0 0 0
* Denotes Guarantee and Risk Management Products.
** Quasi Equity includes both loan and equity types.
32
Annex I: Social Indicators
Latest single year Same region/income group
East
Asia & Low-
1980-85 1990-95 2002-08 Pacific income
POPULATION
Total population, mid-year (millions) 3.6 4.7 6.6 1,912.4 1,295.8
Grow th rate (% annual average for period) 2.6 2.6 2.5 0.8 2.2
Urban population (% of population) 14.0 14.1 12.5 43.3 31.7
Total fertility rate (births per woman) 5.2 4.7 3.8 1.9 4.2
POVERTY
(% of population)
National headcount index .. .. .. .. ..
Urban headcount index .. .. .. .. ..
Rural headcount index .. .. .. .. ..
INCOME
GNI per capita (US$) 680 1,040 1,040 2,182 574
Consumer price index (2000=100) 31 57 167 146 152
Food price index (2000=100) .. .. .. .. ..
INCOME/CONSUMPTION DISTRIBUTION
Gini index .. .. .. .. ..
Low est quintile (% of income or consumption) .. .. .. .. ..
Highest quintile (% of income or consumption) .. .. .. .. ..
SOCIAL INDICATORS
Public expenditure
Health (% of GDP) .. .. 2.6 1.8 1.6
Education (% of GNI) .. .. .. 2.7 3.4
Net primary school enrollment rate
(% of age group)
Total .. 66 .. 93 73
Male .. 71 .. 93 76
Female .. 61 .. 93 69
Access to an improved water source
(% of population)
Total .. 39 40 87 68
Urban .. 88 88 96 84
Rural .. 32 32 81 60
Immunization rate
(% of children ages 12-23 months)
Measles 33 42 58 90 76
DPT 40 62 60 89 77
Child malnutrition (% under 5 years) 25 .. .. 13 28
Life expectancy at birth
(years)
Total 54 56 57 72 58
Male 51 53 55 70 57
Female 56 59 60 74 59
Mortality
Infant (per 1,000 live births) 74 62 50 22 80
Under 5 (per 1,000) 103 84 65 27 126
Adult (15-59)
Male (per 1,000 population) 480 425 422 163 306
Female (per 1,000 population) 418 386 306 102 269
Maternal (per 100,000 live births) .. .. 470 150 780
Births attended by skilled health staff (%) .. .. 42 87 42
CAS Annex B5. This table w as produced from the CMU LDB system. 03/01/10
Note: 0 or 0.0 means zero or less than half the unit show n. Net enrollment rate: break in series betw een 1997 and 1998 due to
change from ISCED76 to ISCED97. Immunization: refers to children ages 12-23 months w ho received vaccinations before one
year of age or at any time before the survey.
33
Annex J: Key Economic Indicators
Estimate
Indicator 2005 2006 2007 2008 2009 2010 2011 2012 2013
National accounts (as % of GDP)
Gross domestic producta
100 100 100 100 100 100 100 100 100
Agriculture 39 36 36 34 36 36 36 36 37
Industry 41 45 45 48 45 45 45 44 43
Services 20 19 19 18 20 19 20 20 20
Total Consumption 71 64 67 68 80 78 77 77 76
Gross domestic fixed investment 18 18 18 18 18 18 18 18 18
Exports (GNFS)b
74 82 81 72 56 61 62 63 63
Imports (GNFS) 64 66 68 60 56 58 59 59 59
Gross domestic savings 29 36 33 32 20 22 23 23 24
Gross national savingsc
31 29 29 29 18 20 21 21 22
Memorandum items
Gross domestic product 4,899 5,605 6,387 8,239 8,200 8,390 8,594 8,820 9,078
(US$ million at current prices)
GNI per capita (US$, Atlas method) 680 720 860 1,040 1,140 1,200 1,220 1,220 1,230
Real annual growth rates (%, calculated from 83 prices)
Gross domestic product at market prices 3.6 2.6 6.5 6.6 3.9 3.7 3.3 3.0 2.4
Real annual per capita growth rates (%, calculated from 83 prices)
Gross domestic product at market prices 1.1 0.1 4.0 4.1 1.5 1.4 4.3 1.2 0.6
Balance of Payments (US$ millions)
Exports (GNFS)b
3,511 4,477 5,055 5,711 4,505 4,946 5,220 5,420 5,594
Merchandise FOB 3,278 4,205 4,750 5,397 4,197 4,646 4,920 5,130 5,298
Imports (GNFS)b
3,369 3,959 4,692 5,223 4,899 5,183 5,434 5,605 5,714
Merchandise FOB 1,979 2,281 2,759 3,221 2,962 3,179 3,375 3,511 3,596
Resource balance 142 518 363 488 -394 -238 -215 -185 -120
Net current transfers 434 276 350 318 302 319 334 352 371
Current account balance 205 126 112 228 -546 -393 -371 -344 -282
Net private foreign direct investment 68 193 462 277 263 277 291 306 322
Long-term loans (net) -19 135 -217 -100 139 57 65 83 49
Official -49 .. -127 -131 -38 -30 .. .. ..
Private 29 .. -91 32 177 87 .. .. ..
Other capital (net, incl. errors & ommissions) 62 205 300 -400 371 149 136 85 43
Change in reservesd
-315 -659 -657 -5 -227 -90 -121 -131 -132
Memorandum items
Resource balance (% of GDP) 2.9 9.2 5.7 5.9 -4.8 -2.8 -2.5 -2.1 -1.3
Real annual growth rates ( YR83 prices)
Merchandise exports (FOB) 11.1 -10.1 0.8 0.3 15.5 -0.2 3.5 3.1 2.4
Merchandise imports (CIF) 32.6 10.5 9.7 -7.1 -3.6 4.0 3.0 2.3 2.0
Actual Projected
34
Annex J: Key Economic Indicators, continued
Actual Estimate Projected
Indicator 2005 2006 2007 2008 2009 2010 2011 2012 2013
Public finance (as % of GDP at market prices)e
Total revenues and grants 34.9 36.7 37.3 32.6 27.1 26.5 26.6 27.0 ..
Mineral tax revenues 7.6 11.7 12.8 10.2 4.8 4.3 4.1 4.3 ..
Current expenditures 20.1 17.6 19.3 18.3 18.4 18.0 18.3 18.4 ..
Current account surplus (+) or deficit (-) 14.9 19.1 18.0 14.3 8.7 8.5 8.2 8.5 ..
Capital expenditure 11.2 12.3 9.9 9.9 16.0 14.2 9.7 9.6 ..
Foreign financing -1.1 -1.3 -2.3 -1.9 0.1 0.8 0.9 1.1 ..
Monetary indicators
M2/GDP 33.4 41.1 48.1 45.0 62.2 62.2 62.2 62.2 62.2
Growth of M2 (%) 29.5 38.9 27.7 11.4 38.8 6.3 5.4 5.1 4.8
Private sector credit growth / 155.7 126.1 470.9 -1312.9 67.4 124.6 120.1 115.1 116.9
total credit growth (%)
Price indices( YR83 =100)
Merchandise export price index 104.5 149.2 167.2 189.5 127.6 141.5 144.8 146.4 147.6
Merchandise import price index 176.9 182.4 197.2 241.7 232.7 239.0 245.0 248.3 248.9
Merchandise terms of trade index 59.1 81.8 84.8 78.4 54.8 59.2 59.1 59.0 59.3
Real exchange rate (US$/LCU)f
100.7 101.0 96.6 109.4 .. .. .. .. ..
Central Bank's Repo rate 9.0 7.5 7.0 9.0 9.0 9.0 9.0 9.0 9.0
Consumer price index (% change) 1.8 2.4 0.9 10.8 5.3 5.0 4.6 4.2 3.7
GDP deflator (% change) 15.9 9.9 2.6 11.6 -3.3 2.5 2.0 2.0 2.4
a. GDP at factor cost
b. "GNFS" denotes "goods and nonfactor services."
c. Includes net unrequited transfers excluding official capital grants.
d. Includes use of IMF resources.
e. Consolidated central government.
f. "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation.
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MAP SECTION
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