I found this article on the net, it's 10 years old but I thought it might make interesting reading.
[http://www.wsws.org/news/1997/apr1997/png-a04.shtml]

NG: a social volcano begins to erupt
By Peter Symonds
4 April 1997

Papua New Guinea Prime Minister Sir Julius Chan was forced to stand aside last week after thousands of protesting students, unemployed youth, workers and soldiers surrounded the parliament building demanding his resignation.

The angry demonstration outside parliament was part of a rising tide of opposition which erupted over the Chan government's hiring of mercenaries from Sandline International to fight on Bougainville.

Chan, his deputy Chris Haiveta and Defence Minister Mathais Ijape all stepped down pending an inquiry into allegations of corruption over the Sandline contract. Former minister for mining and petroleum John Giheno has been appointed interim prime minister.

PNG's military chief Brigadier General Jerry Singirok initially provoked the political crisis by calling for Chan's resignation over the Sandline deal. But the rapid escalation of the protests revealed the deep-seated social tensions being generated by rising levels of poverty, unemployment and social deprivation in the country.

The frustrations produced by the huge disparities of wealth and poverty in PNG quickly spilled over into widespread ransacking of shops and trade stores. Outside military barracks and parliament house, thousands participated in anti-government protests, defying heavily-armed police, roadblocks, a night-time curfew and a ban on marches.

The besieging of parliament further exposed the isolated nature of PNG's ruling elite. A thin layer of politicians, senior government officials and businessmen preside over the state apparatus on behalf of a handful of giant mining corporations and trading companies which dominate the PNG economy.

The vast wealth extracted from mines such as Ok Tedi, Porgera and Mt Kare by Australian and other multinational corporations stands in stark contrast to the deteriorating social conditions endured by the vast majority of the population. The country's health statistics and educational standards are among the worst in the world.

It is little wonder the decision to spend $46 million on a mercenary operation to reopen the lucrative Panguna copper mine on Bougainville provoked an angry response from students, unemployed youth, public servants, workers and villagers whose living standards have plummetted under the Chan government.

IMF austerity program

Chan was installed as prime minister in 1994, with the direct backing of the then Keating government in Australia, after the previous government of Paias Wingti failed to resolve a staggering financial crisis and began to look to Asian sources of aid and investment to break its dependence on Australian capitalism.

One of the reasons for the fiscal crisis was the closure of the CRA-run Panguna mine, which once accounted for 44 percent of the country's export earnings and 20 percent of the government's revenue. Its closure undermined investor confidence, leading to a sharp drop in new mineral exploration investment, from $388 million in 1990 to $125 million in 1993.

In a desperate bid to halt the slide, the Wingti government lowered the corporate tax rate from 30 percent to 25 percent and cut the top personal income tax rate from 45 percent to 28 percent, while slashing spending on basic services such as education, health and welfare. However these inducements failed to reverse the plunge in investment.

In return for an emergency $121.5 million loan, a syndicate of international banks forced the Wingti government to hand over, in advance, its rights to mining and oil revenue. The government had to agree to instruct mining and oil companies operating in PNG to pay their taxes and royalty payments in US dollars into a special Cayman Islands account established by the banks. In effect, the government's future revenue was garnisheed.

As soon as Chan took over in 1994 he sought to satisfy the demands of the bankers and the International Monetary Fund by devaluing the kina by 15 percent and freezing government spending and staffing levels.

The devaluation of the kina, calculated to boost the profits of the mining companies and other international investors, has had a devastating effect on the income of working people. Prices have soared - the inflation rate was 17.3 percent in 1995 and 11.5 percent in 1996 - without any rise in wages.

Last year the Howard government pressured Chan into imposing further draconian measures set down by the World Bank in return for a $455 million emergency financial package.

Under the World Bank-IMF "structural adjustment agreement" the PNG government agreed to axe hundreds more public sector jobs, introduce a consumption tax, lower tariff barriers and end subsidies for cash crops such as coffee, copra, cocoa and palm oil.

In last year's budget, tertiary education fees were introduced for the first time. Set at 10 percent of course costs, the fee puts higher education out of the reach of most youth.

Social gulf

There is a vast social gulf between the tiny ruling class in Papua New Guinea and the vast majority of people who are forced to eke out an existence in villages, in poorly paid jobs or through intermittent casual employment.

Chan, a wealthy businessman, personifies the privileged elite. He owns a shipping company and an airline and has a private fortune estimated at $100 million.

The country's 109 MPs have annual slush funds of $500,000 each, supposedly to be used for development projects in their electorates. In reality the money is often used to advance the private interests of MPs, their families and close supporters.

By contrast, the take-home pay of an ordinary public servant is a mere $150 a fortnight. Wages for public sector workers have been frozen until 1998.

Most of PNG's people - about 80 percent - live in rural areas, often relying on small cash crops and garden plots for survival. Some 24 percent of those over the age of 10 are involved in subsistence farming and lack even the most meagre monetary income.

A growing lack of land and few jobs in rural areas have driven many into the towns in search of opportunities, swelling the already over-crowded shanty towns. Officially the population of Port Moresby is 200,000, but other estimates put the figure at closer to 400,000 once the surrounding shanties are included.

In the urban areas, 85 percent of people are under the age of 24, many unemployed or under-employed.

Urged on by Canberra, successive governments have responded to these explosive social conditions by introducing police state conditions. These include a 10pm to 4am curfew in Port Moresby, police roadblocks and the return of the death penalty.

Despite these measures, the ruling layer still confronts falling economic growth rates, rising foreign debt levels, and a large budget deficit. A continuing drop in the value of the kina has increased debt repayments - currently estimated to be 466 million kina a year on government debt alone.

While the Chan government has given the go-ahead to huge mining projects such as the $1.1 billion Lihir gold mine in New Ireland, PNG's economic growth rate dropped from 16.6 percent in 1993 to 2.4 percent in 1994. In 1995, the economic output actually shrank by 2.9 percent before returning to a low growth rate of 2.3 percent in 1996.

Hundreds of millions of dollars in profits have been extracted from some of the largest gold, copper, oil and natural gas mines in the world while the IMF, the World Bank and Australian governments have imposed drastic cuts to jobs, services and living standards. It is this widening chasm between the wealthy few and the masses of urban and rural poor which is fueling the sharpening social frictions in Papua New Guinea.

The weakness of the movement against the Chan government lay in its lack of an alternative political perspective. The hostility felt by broad masses was able to be channelled by Singirok, with the backing of the Howard government, into carrying out a parliamentary reshuffle. Furthermore anti-Chinese sentiments and inter-clan animosities were whipped up in a bid to divide the working class and oppressed masses.

Workers need to build their own political party independent of all factions of the ruling elite. Only then can the urban and rural masses be mobilised in a unified movement aimed at reorganising society so that the vast wealth created by their labour is re-directed to satisfy their burning social needs.

Very interesting reading, devaluation of the kina I think was really bad pressures from multi-naitonal companies. I could not really understand the 15% devaluation, could anyone give us an insight why the devaluation.