Rowan Callick, Asia-Pacific editor
The Papua New Guinea government is "critically short" of cash, according to Treasurer Bart Philemon, and will be relying on an Asian Development Bank loan and asset sales for revenue injections in the next month.
Mr Philemon told The National newspaper that in the meantime, the government would borrow more from the domestic economy to keep paying teachers and doctors.
Responding to a question in parliament from former prime minister Mekere Morauta - citing an article in The Australian Financial Review on PNG business concerns about rates - Mr Philemon said the interest rate on treasury bills was just below 20 per cent, which was "unacceptable".
He said that 140 million kina ($57 million) budgeted from the ADB loan and K200 million from asset sales had been delayed and that a team of negotiators had been sent to Manila to negotiate the drawdown of the ADB loan.
The ADB - which, like other international lenders to PNG, has made improved governance a condition - is believed to have expressed concern about the manner in which the government removed the acting managing director of the National Fisheries Authority, Anthony Lewis.
Meanwhile, Mr Philemon maintained that the PNG economy would return to growth later this year following three years of recession, to register a 1.8 per cent rise in gross domestic product for the year.
He told a seminar launching the country's Independent Consumer and Competition Commission that GDP had declined in real terms since 1993, coinciding with the stagnation of formal employment.
The government is relying on exports to lead the economic recovery, a move applauded by Mike Manning, the executive director of the private-sector-run Institute of National Affairs.
But he warned that "exports will not increase because leaders want them to or because they tell the private sector it is its responsibility to make them grow, which is the approach that some previous governments have taken.
"They will only grow when the economic conditions are provided."
He said the private sector had identified the key economic constraints as poor law and order, policy uncertainty, corruption and currency fluctuation, followed by interest rates, inflation, transport, electricity and telecommunications.
In a separate development, the cost of telephoning PNG from Australia has risen 150 per cent due to charges imposed by Telikom, PNG's monopoly state-owned telco. The country's first GSM network has also been launched.
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