by PAUL FLANAGAN

• PNG’s revenue collapse is likely to continue with estimated additional shortfalls of K1.5 billion for both 2016 and 2017. This will add to the budget deficit, debt levels and financing pressures.
  • The major reason for this collapse in revenues is not the fall in international commodity prices
    •  The reason is the fall in domestic tax collections as a result of PNG’s domestic recession.
  • There have already been enough expenditure cuts in key sectors between 2015 and 2017 (a 52% real cut in infrastructure, 45% in education and 40% in health with large on-going cuts already planned in future years).
  • Better policies are needed to restart growth and additional tax measures should be considered.
• In 2014, it was forecast that 2017 PNG revenues (so excluding international grants and after adjusting for accounting changes) would total K15.2 billion. This has fallen in each subsequent budget (the falling lines shown in the figure below) so that by the time of the 2017 budget these were K4.7 billion lower than initially forecast – a drop of 31%.
  • And if we look at 2018 figures the fall is K6.3 billion or 38% from expectations of 2014.
• The fall in revenues has gone through several phases.
  • The 2015 budget removed K3.3 billion in resource revenues even prior to the fall in commodity prices. This is the K3.3 billion “missing revenues” referred to in the much condemned but broadly accurate blog (see here) predicting the fall in oil prices would hurt revenues and the balance of payments. This early diversion accounts for 22% of the total revenue fall.
  • The 2016 budget included most of the impacts of the fall in international commodity prices – this remaining fall in resource taxes and dividends accounts for 28% of the total revenue fall.
  • The 2016 budget also showed a major fall in domestic taxes – indeed, the relevant 2015 MYEFO showed these were even larger than the additional falls in resource revenues.
  • This fall in domestic taxes continued into the 2017 budget.
  • The major reason for the fall in revenues has been slower growth in the PNG economy – indeed a domestic recession in non-resource GDP after the end of the PNG LNG investment phase – see here and here.
    • Company tax collections are estimated to be K979m lower, GST K610m lower and personal income taxes K408m lower in 2017 relative to 2014 forecasts.
    • This fall in domestic taxes, reflecting negative real economic growth, accounts for 48% of the fall in estimated 2017 revenues since the 2014 budget (see pie chart below)
  • PNG’s Treasury has moved to a pattern of significantly over-estimating revenue forecasts
    • Based on figures from 2013,  the average forecast shortfalls in PNG revenues (excluding international grants) has been K1,424 million in the actual budget year
      • rising to K3,256m two years from the budget (26% of average revenue forecasts)
    • As PNG’s growth prospects are still very uncertain, and given the patterns of oversell in recent budgets, this shortfall may also occur again in the 2017 revenue forecasts.
      • The 2016 forecast already includes a non-revenue item for K725m from the sale of the currently off-budget PNG LNG assets held in Kroton
      • Using the same simplified methodology for analysing the MYEFO here, the three main tax sources of personal income tax, company tax and GST for 2016 are estimated to be K750m lower than the figures included in the 2017 budget (this is even after using the GFS 2014 version of GST ie including provincial allocations).
        • Together, this implies 2016 revenues are likely to be K1.475 billion lower than included in the 2017  budget.
      • For 2017, the K750m lower tax base will flow through the forward estimates. The compliance dividend of K400m is very unlikely-a reasonable assumption may be K100m. Forecast dividend payments of K1,075m are unlikely – a figure closer to 2016 estimates of K616m is more realistic (noting the forecast for 2018 is only K80m).  Together, this implies 2017 revenues are likely to be some K1,508m lower than forecast in the 2017 budget (almost exactly in line with the pattern of over-estimates for the last four years).
      • Beyond 2018, the gap between the forecasts and likely outcomes is expected to drop quickly. In particular, the forecast of no dividend payments from the PNG LNG project from 2018 onwards is extraordinary (unless the funds are being held in Kumul Petroleum for other purposes).
    • Lower domestic revenues in 2016 and 2017 will increase deficits and build up debt levels. Given the difficulties of domestic financing, and little scope to do more on the expenditure or revenue sides prior to the mid-2017 election, there is now even greater pressure on getting international financing
      • The Sovereign Bond appears to be effectively dead.
      • The Credit Suisse $US200m tranche will assist but its costs should be made public – especially before any further tranches are drawn down
        • And the Kina should be allowed to move to market levels to ensure the most available Kina flow from any $US borrowing (see here and here)
      • PNG’s credit rating will remain under significant downward pressure.
    • PNG needs to move to better pro-growth policies to fix the budget and possibly consider other tax measures to help fill the budget gap
      • such as a capital gains tax suggested in the recent PNG tax review by Sir Nagora Bogan
      • too much emphasis has been placed on cutting expenditures in key sectors such as health, education and infrastructure (and not enough on administrative costs or constituency funds).

by PAUL FLANAGAN

In an article for the ANU’s Development Policy Centre eighteen months ago (see here), I congratulated PNG’s central bank (BPNG) for its very constructive stance in stopping its effective printing of money to fund the government’s budget deficit. I noted how this reflected positively on the independence of BPNG, an independence built into its charter by Sir Mekere Morauta (PNG’s former Prime Minister) and Sir Wilson Kamit (PNG’s central bank governor from 1999 to 2009) in response to PNG’s last major economic crisis in the late 1990s.

Unfortunately, this independent role appears to have been reversed from the start of this year. Based on the latest Quarterly Economic Bulletin released on 18 November 2016 and its accompanying tables (esp Table 2-3 for BPNG’s assets sheet see here) PNG appears to have returned to a very slippery slope of effectively printing money by back-stopping auctions in government securities – a practice initially warned about in September 2014 (see here)

As shown in the graph below, the central bank started buying surplus government securities (those that no one in the private market was willing to buy) in September 2014.  This continued through until March 2015 when the bank announced that it had reversed its earlier policy.  This was the end of first phase of effectively printing money.  Over the remainder of 2015, despite the increasing cash shortages facing the government, the central bank persevered with this policy which helped ensure the government finally started to address its budget problems and reduced the risk of accelerating inflation.

BPNG PRINTING MONEY

In an extremely worrying trend, the central bank started purchasing large amounts of government debt from February 2016.  Over the next five months BPNG acquired K1,167.7 million in extra government securities. This is over half (55.3%) of the government’s expected budget deficit for the full 12 months of 2016. Indeed, for the single month of June 2016, the increase was slightly over K704.8 million – the largest monthly increase in BPNG’s history (the next highest was K508.7 million in October 2014 during the first stage of effectively printing money).

The data stops in June 2016. Has the situation improved since then, or become much worse? I did ask BPNG for any updates on the figures last week but there was no response (which is the usual government reaction to any of my requests for checking or clarification).

So why is this a problem? Primarily because economic history indicates that a central bank buying any surplus government bonds is a very slippery path towards over-heating the economy and hyper-inflation with all of its disastrous impacts for growth and well-being.  This is the Zimbabwe example, the Germany Weimar Republic pre-World War 2 example and many, many others.

A reasonable and accessible summary of the concerns and additional examples are in the Wikipedia article on “hyperinflation” (see here).  This article states “Hyperinflations are usually caused by large persistent government deficits financed primarily by money creation (rather than taxation or borrowing). As such, hyperinflation is often associated with wars, their aftermath, sociopolitical upheavals, or other crises that make it difficult for the government to tax the population. A sharp decrease in real tax revenue coupled with a strong need to maintain the status quo, together with an inability or unwillingness to borrow, can lead a country into hyperinflation.”

As noted in the September 2014 article, “once started, this near printing of money can be a very addictive habit for any government.”

So how is this different from “quantitative easing” in developed countries such as Japan and the US.  There are several important differences.

First, there are very few inflationary risks in these countries – to the contrary, there had been fears in Japan and the US of “deflation” prior to introducing the policies.  PNG’s inflation rate has already started creeping upwards even though its managed depreciation has now stopped.

Second, the “quantitative easing” policies in the US and were directed at restoring private sector economic growth by increasing the level of credit in the banking system – not simply financing a government budget deficit. Government spending may also be important for growth, but that depends on the quality of the government spending. For PNG, recent budgets have seen massive cutbacks in key sectors such as infrastructure (where the level of spending now is less than 2011 ) and key longer-term social investment spending (in effective health and education programs). The biggest areas of expenditure growth have been in interest costs, government administration and political constituency funds – none of which could be seen as pro-growth government spending.

Third, developed countries have used “quantitative easing” as a very transparent and public measure designed to build economic confidence.  In the case of PNG, this appears to be a policy done by stealth. Unlike the start and ending of the first stage of effectively printing money shown in the graph above and described in the top two links, I can find no comment on the public record about this change of approach since February 2016.

Fourth, there is no public “exit” strategy. The return to a government surplus keeps getting pushed back. The lack of transparency inevitably raises fears. Following is a snapshot of the 14 December weekly Treasury Bill results. The government asked financial markets last week for K726.33 million.  The private sector (mainly PNG’s banks, superannuation funds and finance companies) only decided to buy K217.88 million of these Treasury Bills.  The shortfall in that week alone is an extraordinary K508.45 million. Will the Bank of PNG have to step in and pick up the tab?

treasury-bills-results-14-dec-2016

Finally, PNG does not have the offsetting policies that can help minimise the damage to macro-economic stability from this quantitative easing. Specifically, PNG no longer has a market-related flexible exchange rate, and there is no clear wages policy (although recent indications of some public sector wage restraint is welcome).

The central bank of PNG appears to have moved PNG’s economy back onto a slippery slope of effectively printing money. Providing a blank cheque to the government also squeezes out the private sector in such important areas as getting access to foreign exchange. Alternative financing options for the government’s deficit over recent years have not gone well – the so-called Government Sovereign Bond and the funding from the IFC – and the full costs of the Credit Suisse loan are unknown. Even minor attempts to increase tax in the 2017 Budget appear at risk in the January Supplementary Budget due to political pressures. Expenditure cuts have been too severe and in the wrong areas (see here).  If there is a change of government in mid-2017, much work will be required to restore PNG’s economic credibility.

DORA LU'S FORMER MISTRESS, MINING & PETROLEUM MINISTER NIXON DUBAN, IS GIVING AWAY MADANG TOWN LAND AND WHO MIGHT BE MAKING MONEY ON THE SIDE? (from PNG Exposed):

by JAMES PERA KINAP

THE STATEMENT THAT HE IS A "FAMOUS HOMOSEXUAL MP".

When the PNG Blogs posting came out on 19th December seemingly connecting Tkatchenko with a Malaysian woman who had overstayed her visa, it included what potentially could have been a much much more slanderous, libelous and defamatory implication - that Justin Tkatchenko was also being referred to on the posting as a "famous homosexual MP". If there was anything on that PNG Blogs posting that could damage an MPs reputation in the kind of cultural environment that operates in PNG, it would be the declaration that he or she was a homosexual. If there was one false allegation on the PNG Blogs posting that would infuriate Justin Tkatchenko, it would be a false declaration that he was a "famous homosexual MP". There would be no possibility of overlooking that statement by Tkatchenko.

There are few countries in the world today where anti-gay sentiments are higher than in PNG, although anthropologists found ritual gay behaviour to occur in many traditional PNG societies. Thus, PNG is one of the places where any politician falsely accused of being a "famous homosexual MP" would rise up and come down hard legally on whoever labeled them as such.

Justin Tkatchenko's letter of complaint to the NCDC/Central Police Commissioner the following day laid out exactly what he found to be slanderous, libelous and defamatory about the PNG Blogs article. He had but a single complaint: That the PNG Blogs posting was falsely implying that he (Tkatchenko) was connected with the Malaysian woman arrested with sex toys, sex enhancement pills and drugs".

Tkatchenko made no complaint whatsoever in his letter that the PNG Blogs posting's implication that he (Tkatchenko) was a "famous homosexual MP" even though if not true, that part of the PNG Blogs posting was without question the most defamatory, slanderous and libelous.

The implication thus becomes that Justin Tkatchenko accepted that the statement implying that he was a "famous homosexual MP" was not slanderous, libel, or defamatory. That would be most commonly interpreted as being an acceptance that the statement is true, even though in actual fact, one would more accurately describe him as a likely bisexual rather than strict homosexual person. Many politicians elsewhere in the world have been caught having affairs while on the surface, happily married or in a long term heterosexual relationship (http://www.huffingtonpost.com/…/politicans-gay-rumor_n_4549…). This is all about preferences, not anatomical abilities.

We already got some messages from gay people on the social media who are keeping tabs on the Tkatchenko-PNG Blogs drama. Niugini Outlook published a legal advisor's reading of the whole affair yesterday and that is what has created the most reaction. One feedback we got was that Tkatchenko, through his words, has transitioned "softly but determinantly" to taking the crown of Papua New Guinea's first admitted gay Member of Parliament. It appears that for gay people throughout PNG, this is an historic first and rallying point.

A second comment gave the opinion that NCDC with its rapid transitioning away from traditional melanesian society to a more modern urban one, is probably the only place in PNG that a known gay MP could serve from. Tkatchenko has been gay friendly in the past, good chums with openly gay PNG performer Moses Tau and mixing well with the Hanuabada gay community. Moresby is the centre of the openly gay PNG community and Justin Tkatchenko now becomes the unofficial big man of that community.

With this indirect admission that the "famous homosexual MP" label, we wonder if the old sodomy charge will rear its ugly head again (see https://thepngblogs.blogspot.com/2015/06/blog-post.html). Possibly the cloud of that incident, along with any other stories of gay relationships that have not seen the light of day but easily could be revealed if Tkatchenko were dare to lie and complain that the "homosexual MP" label was libellous, is what made him decide NOT to include that allegation in his criminal complaint letter to Garry Baki.

Justin Tkatchenko's criminal complaint letter to police revealed much more than he probably wanted. The letter was posted onto the PNG Blogs facebook site by one "Sonny Sosis Siamoli". Wonder how it came to be in his possession?

This will be a challenging year for Papua New Guinea and PNG Blogs as whole, we have crossed the Rubicon into the new year, 2017. Our challenges remain, our issues remain unsettled, government sponsored corruption, the practice of partiality in awarding jobs and other advantages to friends or trusted colleagues, especially in politics and between politicians and supportive organizations in Papua New Guinea is at a all time high and in the coming year a lot will be on offer, The national elections, the continuous eroding of the Judicial branch of the 3 part government system. The continuity of daylight corruption and stealing by Peter O'Neill and his government and many of these issues will remain unsettled. The real issue at hand is the financial status of PNG. Papua New Guinea is broke and we still pretend. We thank all our readers and supporters for sticking around with us for the past 7 years, Here's to another 7.

PAUL REINBARA

by PAUL FLANAGAN

PNG’s government must be embarrassed by the International Monetary Fund’s (IMF) assessment of its economic performance. In an extraordinary step, and the first time in PNG’s 41 year history of Independence, the PNG government has refused to release the IMF’s 2016 summary of the PNG economy. 98% of countries agreed to release this information in 2015 – so the PNG government has moved to the bottom 2% of governments when it comes to economic transparency.

In the IMF’s final press release (see here) before Christmas (generally seen as a good time to bury bad news), the International Monetary Fund indicated that “The [PNG] authorities need more time to consider the publication of the staff report and the related press release.” This appears to be polite IMF diplomatic speak for the PNG government not wanting to release the information. The IMF mission visited in mid-2016. An early draft asking for PNG government comments would have been provided about two months ago. A draft report was considered by the IMF Board on 29 November which would have included PNG’s comments on the staff papers. There has been more than enough time for the IMF’s views to be considered and for the PNG Government to respond.

If there is some genuine reason for needing more time then this could have been provided. In the absence of any explanation for this unprecedented delay for PNG, and an action so out of step with nearly all other countries, it is impossible to conclude other than the PNG government disagrees with the IMF’s assessment. Rather than engaging in open, democratic public debate, it simply doesn’t want alternative views published (at least until after the January Parliament session or the mid-year elections).  This just adds to the emerging pattern of reduced transparency from the O’Neill/Dion government.

Release of the IMF Board’s assessment and the related IMF staff documents is considered “voluntary but presumed” according to the IMF’s transparency procedures. Specifically, these transparency guidelines (see here) state “In 2015, 98 percent of member countries agreed to publish a press release, providing the IMF Executive Board’s assessment of the member’s macroeconomic and financial situation…”. So PNG has joined a very, very small set of countries at the bottom of transparency tables.

Why does this matter?

First, PNG has been actively seeking international financing to cover its foreign exchange and budget financing shortfalls following the largest budget deficits in PNG’s history.  With such a lack of transparency, the chances of obtaining a Sovereign Bond are effectively zero. International investors will be looking for adequate information from a trusted international source (the IMF) to assess the risks of investing in a PNG bond.

Second, such actions will also flow into assessments of PNG by other international lenders – not through formal requirements but through growing concerns about PNG falling back on central bank financing of deficits, moving to a fixed exchange rate and having a medium-term fiscal adjustment path that lacks credibility.

Third, international credit agencies will view this development with concern. Countries with similar or even lower credit ratings do allow this information to be published. The question always becomes “What are they trying to hide?”

Fourth, this will affect broader investor confidence in PNG. It is not just the quality and availability of the resource riches in PNG that attract investors – it is a broader set of issues including economic management and transparency. Hiding information will affect future economic growth possibilities.

Finally, and most importantly, the people of PNG have lost a key source of reasonably independent information for judging the performance of the O’Neill/Dion Government. During 2016 there have been growing doubts about the credibility of information being provided by the Government. More detail on the concerns that could have been alleviated by the IMF assessment are provided in the appendix at the end of this article. They cover issues such as: the Treasurer’s confusion about the actual size of PNG’s economy; the severity of PNG’s falling growth performance; PNG’s unfortunate retreat to printing money; serious credibility issues around budget revenues, expenditures and financing; the move to a fixed exchange rate and linked foreign exchange shortages; and what are increasingly seen as anti-growth policies. If the O’Neill/Dion government was doing as well as it claimed on such issues, it should have been in a position to welcome the IMF report.

Conclusion

I have been critical of many of the PNG government’s numbers during 2016 (details below).  In my blogs, I have talked of recent PNG figures lacking credibility, policy confusion, and even of fraudulent practices in the latest budget. The IMF report could have proven the PNG government was right and that I was wrong.  Instead, the O’Neill/Dion government has chosen a dishonorable path of suppressing information by a well-recognised international source – the IMF.

In 2015, the only two IMF members that did not publish a press release with the Board’s assessments (indeed, they did not publish a press release at all) were Suriname and Dominica. Ironically, less than 12 months later, both countries were in IMF programs trying to sort out economic crises. If there is a change of PNG’s government in mid-2017, it is likely that assistance will have to be sought from the IMF and other concessional sources of finance to help deal with PNG’s partially hidden economic mess. If there is no change of government, and even with the boom of another few big resource projects, PNG is likely to continue down a slippery slope of poor economic outcomes for its people and declining transparency on economic management. That the O’Neill/Dion Government felt the need to hide the feedback from the IMF is a shameful way to start 2017.

Appendix: Detailed issues requiring clarification

GDP size: In March 2016, the government suddenly announced that the size of the economy had increased dramatically – by 53% in 2006 alone and still a magical 40% higher by 2013.  These higher estimates are the entire basis for the government claiming its debt to GDP ratio is just below 30% and thus under the legislated limits under the Fiscal Responsibility Act. But there has been on-going confusion as to what figures to use – the 2017 Budget document used multiple versions (see here). Even at the recent PNG Mining and Petroleum Investment Conference, the Treasurer stated in his 2 December speech, when talking about the strength of the PNG economy, that it will grow from K47.3 billion in 2015 to over K57 billion in 2017. If we use these nominal GDP numbers with Treasury’s official debt numbers for 2017 of K21.6 billion, the government would be exceeding its debt to GDP limit imposed by the Financial Responsibility Act with a ratio of 37.7% – well above the 30% limit (official central government debt of K21,623.3m from Table 12 of Appendix 3 in 2017 Budget Volume 1 divided by K57,337.6m from Table 1 of the same appendix).  This would directly contradict what his Prime Minister said just 15 minutes earlier to the audience of over 1,000 potential investors. The on-going trouble is that PNG is using two very different sets of GDP numbers.  It is confusing for others, and it appears to be confusing for even PNG’s Treasurer and Prime Minister.  An IMF view on the updated GDP figures would have helped clarify matters for everyone.

GDP growth rates: the government has admitted that GDP growth rates have fallen from their inevitable PNG LNG highs down to a level below or at similar levels to population growth rates. However, there are many other indicators that are so negative that it is almost certain that PNG’s non-resource GDP has gone through a serious recession during 2014 and 2015. The official government figures on growth include real growth in the agriculture sector in 2015 of 1.9%. Such claims were counter-intuitive given that PNG’s subsistence agriculture sector was suffering from its worst drought in 20 years, widespread hunger was being reported, and key cash crop exports had dropped by minus 56% for tea, minus 36% for rubber, minus 20% for cocoa, minus 12% for coffee, minor drop in palm oil, a large increase in copra and copra oil (but the latter account for only around 3% of the total value of agriculture exports – BPNG QEB tables 8.4 and 8.3). The IMF report would have helped clarify the growth story – without such clarification, the conclusion is that the official numbers simply lack credibility.

Printing money: PNG’s central bank started buying large amounts of government securities from the beginning of 2016 (see here).  This is equivalent to printing money. It means that there is no short-term cash shortage, but it also is a very risky approach that undermines confidence, threatens high levels of inflation, exacerbates foreign exchange shortages for the private sector, and puts stress on the entire banking system. The IMF’s views on such developments would have been extremely useful. Without them, it is hard to argue against a view that PNG is heading on a slippery slope towards a Zimbabwe style economic crisis (the author of this article observed this downward drift as Director of AusAID’s aid programs to Africa and the Middle East from 1997 to 1999).

Budget revenues: PNG’s budget revenues have collapsed over the last four years. The main cause has been a fall in domestic revenues reflecting mainly the end of the PNG LNG investment boom and the resultant recession, but also the diversion of dividends to an ambitious government petroleum development company (Kumul Petroleum) and the fall in international commodity prices (see here). Revenue forecasts for 2017 appear to be over-estimated by more than 10%. New tax measures are required to balance out the excessive level of cuts imposed in key areas such as health and education. An IMF view on budget prospects would have been useful, as well as any comments about what has been going on in off-budget funding for state owned enterprises (including the purchase of a 10% government stake in Oil Search shares).

Future budget expenditure: The 2017 budget continued forecasts of very significant cuts to key areas of expenditure such as infrastructure, health and education expenditure (these cuts have exceeded 45% in real terms from 2015 to 2017). The expenditure cutbacks are more severe than those imposed on Greece as part of its austerity program (they balanced expenditure cuts with revenue increases). The move to a more sustainable budget position is necessary after PNG recorded its largest fiscal deficits ever in 2013 and 2014. A shift towards lower deficits is a welcome policy development, but the actual pattern of planned cuts does just not seem credible or appropriate. Specifically, the 2017 budget assumed that there would be identical real cuts in expenditure in all sectors apart from Provinces over the next two years. Such uniform cuts are illogical as they assume, for example, that interest costs will go down despite the continuing growth in public debt. The IMF’s views on these approaches would have been useful, including views on the level of accountability of the extraordinarily high constituency funding through the District Improvement Support Program and the lack of reductions in spending on public service administration. In addition, its views on the actual costs of hosting the APEC conference would have helped deal with differences of view.

Budget financing: PNG is on a treadmill of increasingly short-term public debt that must constantly be re-financed. Using the 2017 budget figures, and excluding the very unlikely K2,800 million assumed from the Sovereign Bond, PNG needs to finance through its domestic auction of Treasury Bills and Bonds nearly K1 billion per month.  The total required financing challenge in 2017 totals at least K13.075 billion  – 106% of total PNG government expenditure.  With the growing likelihood that the private sector will retreat even further from providing financing (for example, the 14 December 2016 weekly auction only raised K218 million of the K726 million being sought) there is likely to be even greater use of printing money – and all of its inevitable risks for PNG’s future. Credit Suisse appears to be the only source of potential external financing – and there is no transparency on the terms of such loans. The Opposition could reasonably argue that it should not honour the servicing costs of loans that were excessive and not in the interests of the people of PNG.

Exchange rate: PNG and the IMF had a disagreement in 2015 as to whether the Kina was based on market-determined levels. With PNG effectively moving from a moving peg against the US dollar to an unquestioned fixed peg since the middle of 2016, this disagreement has been clarified. However, the IMF could have usefully provided some views on how best to deal with the foreign exchange shortages that flow from this fixed pegging.

Growth policies: In what appears to be moves towards pre-election populist policies, the government has put forward policies in areas such as agriculture, land and SMEs that are regarded as undermining PNG’s growth potential. Even PNG’s National Research Institute has expressed concerns about some of these proposals. IMF comments on how these could be improved would be valuable.

Smart investors are not anywhere as dumb as the average Papua New Guinean citizen whenever  Prime Minister Peter O’Neill speaks.   O’Neill can utter complete lies about the PNG economy and government budget to the public and people will take his words at face value.  Foreign investors and the foreign owned private sector in PNG make good money because they are not so gullible.  They check things out and what they have learnt is disturbing.  The Prime Minister himself does not understand this reality and continues to present only information he wants the investors to hear.  But the investors are wise to his tricks and overall investor confidence in PNG has plummeted close to nil if the side comments of investors are to be taken at face value.   

3. DANGEROUSLY RISKING THE KINA BY PRINTING MORE MONEY TO COVER GOVERNMENT DEBT: PNG’s central bank started buying large amounts of government securities starting in early 2016. That is well established by PNG Central Bank data. This is equivalent to printing money. It means that on the face of it, there is no short-term cash shortage noticed by the people. However it is a very risky approach that undermines investor confidence, threatens high levels of inflation (price increases that affect all Papua New Guineans), makes foreign exchange shortages for the private sector even worse when trying to bring in imported goods for resale in stores), and puts stress on the entire banking system. Usually these kinds of actions are the mark of governments desperate to hide the true nature of government borrowing. The IMF’s views on such developments would have been extremely useful, since the O'Neill government has no track record of honesty or credibility with regard to negative financial information. Without being able to read an opposing view by a respected economic analysis organization such as the IMF, it is hard to conclude anything other than that PNG is heading on a slippery slope towards a major Zimbabwe style economic crisis.



The PNG Central Bank buys unwanted treasury bonds and inscribed stock that is sold to cover government debt, by releasing money from its vaults that otherwise is released or held dependent on the growth or contraction of the economy, inflation rates, and other factors. This is equivalent to “printing money” and it is a dangerous strategy that has resulted in the collapse of national currencies elsewhere in the world. The Central Bank began this risky strategy in July 2014, seemed to stop about one year later, then resumed again with a massive buy of government inscribed stocks in June 2016. Lax reporting by the PNG Central Bank, perhaps purposeful, is why there is no information available on treasury bill/inscribed stock buys by the Central Bank during the past 6 months.

4. HOW MUCH REVENUE IS THE GOVERNMENT ACTUALLY TAKING IN? As much as the O’Neill government seems intent on covering up bad news about the budget, the government's numbers alone show clearly that budget revenues have been collapsing for the past four years. The main cause has been a fall in domestic revenues. This mainly reflects the end of the PNG LNG investment boom and the resultant recession. The diversion of dividends to an ambitious government petroleum development company (Kumul Petroleum) and the fall in international commodity prices are also to blame in part. However, the government's emphasis on attributing collapsed commodity prices as the source of the problem is vastly exaggerated. The fall in commodity prices only account for 22% of the government shortfall in revenue that occurred in the 2015 budget. The Prime Minister’s continual message that the government’s fiscal problems are due to the fall in commodity prices is misleading to say the least. The bigger reason is that there has been a dramatic drop in tax revenue flowing to the government. This is confirmation that the PNG economy began to contract in 2014 at a time that the Prime Minister was still promising near double digit economic expansion.

Government revenue forecasts for 2017 already appear to be over-estimated by more than 10% and it is only the first week of January. This shows the incompetency of the Treasury Department in creating accurate revenue estimates. This incompetency first surfaced during the second half of 2014 when world-wide the decline of oil/gas prices was projected, yet the government did nothing to accommodate these projections into the 2015 budget presented in November 2014.

The government’s revenue shortfall is now so severe and expenditures so blown out over intended budget caps that the O'Neill government has no recourse but to raise taxes at a time of economic contraction. This is normally the opposite of prudent economic management. A government should be raising taxes during times of economic expansion, not during economic contraction, because in so doing, it delays economic recovery. It is possible that the government will delay tax hikes until the 2017 election is over but the current recession will not be over by then, nor even in 2018.

It is apparent that the 2017 budget is developing in a way that will negatively affect urban residents in particular. New tax measures are the only obvious solution to balance out the excessive level of cuts imposed in key areas such as health and education, which the Prime Minister denies even making, but which clearly show up in the budget numbers.

Being that the government has no credibility anymore on being able to present accurate projections of budget expenditure and revenue, the IMF Report on Papua New Guinea’s State of the Economy for 2015 would have been useful for PNG economists and planners, relevant to what the IMF sees as the longer term prospects for the nation. Investors in particular would be interested in any IMF comments about the shady off-budget funding for state owned enterprises. Off budget funding during the O’Neill government most famously took the form of the 10% government stake in Oil Search shares through the controversial and very costly UBS loan that the Prime Minister arranged without sufficient consultation with Parliament and the NEC. Now there is a new example: A secret new 'off budget' major borrowing scheme involving the illogical Ramu 2 hydro expansion project, whereby a Chinese government arm, SinoHydro recently, through Treasury Secretary Dairi Vele, was given a Sovereign Guarantee for SinoHydro to borrow upwards of around K1 billion to finance the project, government (not SinoHydro) holding the bag to repay the loan plus interest if somehow SinoHydro mucks up the project so that it can't repay the loan. This is the infamous SinoHydro-William Duma sex + bribe case that appeared all over social media just before Christmas.

A planned hydro capacity expansion (Ramu 2) planned for Yonki Dam was revealed as involving a secret government sovereign guarantee to cover the necessary construction loan of up to K1 billion. This is an example of “off the budget” borrowing that has destroyed the accuracy of the PNG budget to display the true state of government borrowing. The Ramu 2 hydro expansion has turned into a bribery-sex scandal involving high level government officials and State Owned Enterprises Minister William Duma, who was demanding a USD $10 million from intended contractor SinoHydro in order for Duma to recommend that SinoHydro received the contract.

5. SEVERE ADDITIONAL CUTBACKS IN FUTURE GOVERNMENT EXPENDITURES: The PNG's incompetence in accurately estimating expenditure versus revenue affects the entire budget. Even the government cannot cover up the full extent of the disaster. Its 2017 budget continue to forecast substantial cuts to key areas of expenditure such as infrastructure, health and education expenditure (these cuts have exceeded 45% in real terms from 2015 to 2017). As a measure of comparison, what the PNG government is doing to cut back basic services to the people is more severe than what was imposed on Greece by the European Union as part of its austerity program (they balanced expenditure cuts with revenue increases), and which led to widespread riots and protests marches in Greece. The move to a more sustainable budget position became more necessary after PNG recorded its largest fiscal deficits ever in 2013 and 2014, both under the O'Neill's government. However, (1) the contracting economy, (2) inability of the budget to withstand much additional cut to basic health, education, and infrastructure expenditure, (3) current, perilous situation with the kina, and (4) excessive government borrowing from overseas institutions, with all loans denominated in foreign currency, leave few options on how a balanced budget can be achieved for many years. That means additional borrowing which will likely continue to violate the legal ceiling. The government’s shift towards lower deficits is a welcome policy development, but unfortunately, the actual pattern of planned cuts does not seem appropriate or even credible, considering what ha become an O'Neill government tradition of providing misinformation and disinformation on budgetary details.




It has been more than 2 years since the Auditor General issued its report that DSIP fund usage isn’t being audited thus preventing prosecution for corrupt mis-use of public funds. Yet, DSIP monies look to be central to the 2017 election and useful for various kinds of vote buying for incumbent MPs in government.

6. WHAT OPTIONS ARE LEFT TO FINANCE THE O’NEILL BUDGET? The government has put itself onto a vicious cycle of creating too much short-term public debt that must constantly be re-financed. This is equivalent to a family who cannot manage their budget and ends up trapped short-term loans just before each payday, repayable at outrageous interest rates. Using the 2017 budget figures, and excluding the very unlikely K2.8 billion revenue that was projected from the Sovereign Bond (which the government's silence on indicates has fallen flat on its face), PNG needs to find some way to use its domestic auction of Treasury Bills and Bonds and come up with nearly K1 billion per month that can be used to balance budget expenditures. In total for 2017, the government is going to have to come up with at least K13.075 billion in new budget revenue, which equates to 106% (that number is not a typo!) of total PNG government spending. The private sector is unlikely to come forward to share the burden. Results from the weekly auction of government bonds makes this very clear: The 14 December 2016 weekly auction only raised K218 million of the K726 million that the government was seeking). This inevitably will force the government into even greater use of the disaster strategy of 'printing more money' (doing so in a sneaky way, i.e. by having the Central Bank "create" more money to buy up government bonds). There are so many examples of what a disaster to the country this will bring, most recently including the hyper-inflation in Venezuela, where money used to purchase goods is being weighted by the kilo rather than the storekeeper looking at the monetary value of the money.

Hyperinflation destroys national economies and tends to impoverish all but the rich. This table shows how Germany’s currency in 1919 went from being worth something to being worth nothing. It all happened because the German government started printing money to cover its growing national debt rather than fund the debt through treasury bonds and other types of loans.

Sadly, the PNG government's credit rating perception has sunk so low that the commercial Credit Suisse bank appears to be the only source of potential external financing at this point. This is of no comfort to the private sector and potential investors in PNG because any commercial bank loans the government arranges comes with conditions and terms that can be hidden from the public eye. The lack of transparency has exponential spillover effects. The less the government shares, the more distrusting become the very agents that are key to financial recovery. – and there is no transparency on the terms of such loans.

7. CONTINUED DECLINE OF THE KINA AND PROJECTED RISING PRICES: It is well established that the value of the kina was at a decade's long high against the US dollar when Peter O'Neill's government came to power in mid-2011. The kina has been sinking ever since, declining from nearly 2 kina to 1 dollar, down to more than 3 kina for 1 dollar, the lowest value in more than 15 years. Other currencies matched up against the kina have followed the same general trend.

The kina reached a 15+ year peak in value just after Peter O’Neill took over as Prime Minister. It has been on a decline ever since.

It is known that in 2015, the IMF had a disagreement with the O'Neill government as to whether the Kina’s value should be based on market-determined levels. In other words, should the kina's value be determined by a supply and demand relationship as is the case with the currencies of every well run economy in the world, or should the kina’s value be artificially propped up?

Since the middle of 2016, there has been a change in policy, probably because there was a new tool available to handle the kina a different way. Before mid-2016 the government didn’t have the funds to buy kina to stabilize its value and the value kept slipping but not finding a point of “supply and demand” stability . Now it appears that the kina is being stabilized by the injection of money, most likely the loan money from Switzerland’s Credit Suisse bank. This action, of course, flies in the face of how currency value is managed in sound economies.

Since mid 2016, it has become clear that the government is artificially propping up the kina and stopping it from much further decline in value. This is non-sustainable and is probably a political ploy to keep prices from skyrocketing for consumers. How much of the Credit Suisse loan has been eaten up buying kina to maintain its value is unknown, but when the money runs out, the kina’s decline is likely to be dramatic and painful to consumers.

The suspicion is that the Central Bank of PNG has bowed to political pressure - the cardinal sin of any national Central Bank, being that politicised decision making always eventuates in short term planning that eventually destroys both economies and national currencies. The PNG government quite logically would be pressuring the Central Bank to keep the kina rate stable until the election, so that there is no outrage caused by rising prices caused by a declining kina. Unfortunately this means that the PNG government has trapped itself into a no win vicious cycle that the people of PNG will end up suffering from: (1) currency begins a downwards drift due to too much dependence on imports and/or too little export revenue, (2) consumer prices start rising for import-dependent economies like PNG as the value of the currency declines, (3) government hides the root of the problem and starts pumping in money to stabilize the currency by buying up kina, (4) stabilizing the currency is nonsustainable because of the amount of money it costs to keep the kina at one level, which in PNG has been achieved via high interest commercial bank loans, (5) the pressure on the currency to plunge downwards intensifies, (6) the government finds itself out of money and unable to continue subsidizing kina buying, (7) the currency collapses dramatically, (8) consumer prices shoot through the roof, much faster than wages rise, causing a big increase in inflation, (9) the increasingly inability of people to buy goods at the higher prices causes a major contraction of the economy to occur, whose after effects can last for years, (11) investors run away from investing in the economy, intensifying the economic recession, sometimes turning it into a major economic depression.

The O’Neill government has hidden most of the important details on what is happening with the PNG kina. We only see that the kina has stabilised, which indicates artificial government subsidies that is almost certainly funded by the high interest Credit Suisse commercial bank loan. The O’Neill government is making no attempt to explain how it plans to avoid the disaster result that occurs in nearly every country that dares try to artificially support the value of the national currency for long.

8. 2017 ELECTION CAMPAIGNING BUDGET BLOWOUTS: Historically, political parties in PNG funded campaigns through private donations. The donations were originally small sized, but this changed as political parties began to cozy up to selected big business. Prime Ministers fell into the trap of giving progressively larger bribes to newly elected/re-elected MPs to buy their loyalty to form the new government and they had to find the source money from somewhere. The classic instance of this getting out of control was in 2007, when Michael Somare received K40 million from Rimbunan Hijau (RH) through an ANZ bank account, to buy 40 MPs off at K1 million each.

In 2012, however, Peter O’Neill and Don Polye, then in close partnership, dramatically changed how political campaigns are funded by the political parties in power. Unknowingly, the taxpayers began funding campaigns of the political parties in power. This was achieved in 2012 by Don Polye drawing up a K500 million supplementary budget that shifted monies to DSIP and other budget line items where that money subsequently could be withdrawn and used by local level political operatives and spent on vote buying). Possibly all of this is legal.

As a result, the O’Neill government has now institutionalized public funding of political campaign costs for PNC and allied parties. In what appears to be moves towards pre-election vote attracting schemes for the 2017 election, the government has been putting forward policies and practices in areas such as agriculture, land and Small-Medium Business Enterprises (SMEs) that economists would typically condemn as undermining PNG’s potential for sustainable economic growth, as it creates greater dependency on government subsidies. Even PNG’s National Research Institute has expressed concerns about some of these proposals. IMF comments on all this would have been valuable, but unfortunately the O’Neill government has become the first government in PNG history to decide not to release the IMF report and thus not to let the people of PNG as well as potential investors and the private business sector see a third party economic perspective on what exactly is going on with PNG’s economy and government spending.

Children voting in Sandaun Province. The O’Neill government has been the first in PNG history to institutionalise public funding (taxpayers money) of the campaigns of whatever political parties are in power. It is using money holding entities such as DSIP to bring large amounts of money to the level of the voter, where lack of financial accountability can easily result in the money being mis-used for different kinds of election fraud. The new system is open to widespread fraud but gives the ruling party the upper hand in retaining power election after election

by MAJOR GENERAL JERRY SINGIROK MBE (rtd)

As a graduate Security Analyst I can forecast and make a critical analysis of where PNG is heading  to under the current status quo .

By default , association and by choice this government and previous governments have developed two sets of economy.

One that with foreign investment and investors and the other with its own people.

The foreign investment seems to grow rapidly and the local businesses seems to be shrinking.

The other issue is  of leadership and accountability. When matters of economic management seems to fail those in power will attempt to resurrect the economy but in haste.

In which case the nation fails thus becoming a FAILED STATE because most if not all arms of government will be denied the resources and budgetary support to enforce government control . Simply there will be no longer any control.

 Law and Order and the Justice system will be unable to sustain its constitutional functions .

Case in point North Korea, Uganda, Zimbabwe Mexico and many Latin American countries.

Nations in history fail because there  is a distinct disconnect between engaging the population in economic activities and corrupt and self serving politicans who associate with foreign investors continue to reap of the nation's wealth and invest overseas at the expense of its own ingenious people.

Such are the downside of the system of government left to us by our former colonizers.

Democracy abused by very few and without public voice and debate is very dangerous when a nation is gaged and suppressed.

Our current impediment faced by  leadership and economic woes reminds me of a compulsory reading at Sogeri many years ago titled; ANIMAL FARM by George Orwell 1945 described the Farm being managed by the pigs but it was a qualified privilege where;
All animals are equal but some are more equal than others"

byBRYAN KRAMER
 
On 22nd December 2016 social media exposed an illegal land grab over two parcels of prime public land in Madang involving Minister of Petroleum & Energy and Member of Madang Open Nixon Duban and the Minister of Lands Benny Allan.

 by POROLO PERIAP

Ru Lu aka Dora Lu graduated from university in Shanghai in English Literature. She went to work for a Chinese State cultural agency as a researcher in Taiwan Affairs. At the age of 23, she was seconded to a second Chinese State Agency to secure access to funding for the cultural agency. Unbeknownst to her, she was groomed to be the mistress of the head of her new employer. She lost her virginity to the head of the state agency, her former employer got access to all the funding it required.

NIUGINI OUTLOOK

THE WORST THING TO DO AFTER YOU’VE MADE A MISTAKE IS TO LIE AND TRY TO COVER IT UP: ENTER POST COURIER “JOURNALIST” DIANNE WAKETSI!
“Journalist” Dianne Waketsi has had a few jobs since she graduated from Divine World University with a degree in journalism. On the surface it looks like she is an experienced reporter, but it is becoming quickly apparent that she’s not on a career upswing, but stuck in a rut at the Post Courier. The most likely reason is her poor journalism skills which have now backfired royally into her face as she has shamed Papua New Guinea generally, and Western Highlanders specifically, as being addicted to using the internet to seek out porn. The facts do not support this at all. In some instances it is clear that Dianne Waketsi outright lied in her story. In other cases, she couldn’t be bothered to understand the statistics she was reporting on, and got it all wrong.

But she admits none of this and is trying to spin the controversy over her article into it being anger at the truth. What Dianne Waketsi wrote is not the truth. What she wrote is not what Google Trends shows. She has now added “proven liar” to her resume already containing “poor journalism skills” as one of her characteristics.

Here is exactly where Dianne Waketsi has distorted the truth or outright lied:

OUTRIGHT LIE #1: That Papua New Guinea ranks #1 in the world typing in the word “porn”. In fact, the list of 25 countries does not even show PNG, even as #25. It is true that PNG is listed as the #1 country for typing in the word “pornography” but the fact that “porn” wasn’t being used at all questioned the conclusion that Papua New Guineans were #1 in seeking porn. Dianne wanted to make a grand point that would shake up PNG and make us a laughingstock to the world. That’s why she lumped ‘porn’ and ‘pornography’ together and pretended that PNG was tops on both lists. It is not.

OUTRIGHT LIE #2: That being ranked “100%” on the list for entering “pornography” means that all Papua New Guineans on the internet have looked for “pornography” using Google at least once. The “100%” value is assigned to the top ranker on all the Google Trends lists. It is an arbitrary but easy to understand standard against which all the other items on the list can be compared. It has nothing to do with HOW MANY people in the country were doing anything.

SLOPPY INVESTIGATIVE REPORTING #1: It can not be concluded that Western Highlanders are more likely to look for porn using Google. PNG has 23 provinces plus the NCDC but Google trends only shows 3: Western Highlands, Morobe, and NCD. As far as the Google Trends statistics show, PNG only has 3 provinces. The fact is that Google can only determine where a Google user comes from based upon what their IP number indicates. IP numbers can be registered for any sized geographic area, which means that you could be living in Kikori, Gulf Province, and using an IP that has been registered as being a “Western Highlands” IP. Dianne Waketsi could have checked the place of origin for Digicel users in Moresby and seen for herself that at least some of the IPs used for Port Moresby residents say that the location is “Kerema”. It is impossible to know whether the statistics lumped under “Western Highlands Province” is really from that location because of the incompleteness of the data and the known generalization or outright error in the way PNG’s IPs are registered.

SLOPPY INVESTIGATIVE REPORTING #2: People can use Google to search for pornography by using all kinds of different words, from ‘porn’ to ‘pornography’ to ‘sex video’ to ‘doggy style’ sex. Different cultures use different words, and developed country societies tend to be more specific with their word usage. Dianne Waketsi never investigated this possibility. It is easily possible that the people in other countries are far more into searching for pornography than the people of PNG but are using a greater variety of search words. When additional search terms for pornography were teste, PNG didn’t even make the list on “most used” for those other terms.

CONVENIENTLY IGNORING A CONTRADICTORY FACT: When Dianne Waketsi was using Google Trends, she could have easily seen the graph that showed trends of usage over time. The fact is that even for the word “pornography”, Papua New Guineans have been less and less attracted to using that word for the last ELEVEN YEARS. Usage of the word entered into Google by Papua New Guineans peaked in 2005 and has gone dramatically downhill since that peak. This completely destroys Waketsi’s main point that Papua New Guineans are addicted to searching for porn on the internet.

CONVENIENTLY IGNORING A CONTRADICTORY FACT: The great majority of PNG citizens have never even been on the internet. Thus, one cannot make any judgements on how the society as a whole seeks out pornography. Only a small minority use the internet or use Google.

------------------

HOW THE POST COURIER’S ‘GOOGLE FOR PORN’ STORY WAS CREATED

The key words that people type into the world’s most dominant search engine, Google, can be analysed by using the application known as Google Trends. You can access it at: https://www.google.com.pg/trends/

At the top you will see a search bar, where there is in light coloured type "Explore Topics". Click on that search bar and inside it type the word “porn” into it, then hit return. You will see a new page appear. At the top will be a graph showing the trend in popularity of “porn” as a search word from a global perspective. There hasn’t been that much change in recent years in the popularity of people looking for “porn” using Google. In fact, it has leveled off as a whole.

Below that graph, you will see a world map. If you don't see a list of countries to the right, then look for a tiny row of lines in the upper right hand side of the map. Click on that little icon and a list of countries should appear. Go down all 25 countries. You will not see Papua New Guinea listed at all.

Thus, we catch the Post Courier and the supposed “journalist” Dianne Waketsi giving a big fat lie to its readers. Papua New Guineans are not typing the word “porn” into Google in very large numbers at all. Papua New Guinea is not even listed in the top 25 for people typing the word “porn” into Google.

It is true that if you change the search word from “porn” to “pornography” you will finally see where PNG is ranked #1. But the Post Courier makes it seem like it doesn’t matter whether you type porn or pornography, you still show that Papua New Guineans are the most porn addicted. This is simply not true.
That the Post Courier would so easily lie to the public on its front page stories makes it hard to believe they can keep a straight face every time they moan and groan about how inaccurate the social media is in reporting on stories. Hello? The Post Courier has most money to do proper investigative reporting than any social media site, that is almost certain. Why won’t they do things right? Is it accidental or purposeful?

Let us continue with our use of Google Trends. If you now click on the country name “Papua New Guinea” where it appears on the list, you will be taken to a new page that shows changes over time for searches within that country in people searching for that particular word. Do this for the example “pornography”, where PNG appears as the #1 site for using that search word. You will see that interest amongst Papua New Guineans in Googling for porn actually peaked around 11 years ago (2005), then collapsed to low levels in 2007 where it has remained more or less ever since. In other words, this is not a “big news story”, Post Courier. All this sudden interest in Papua New Guineans being addicted to finding pornography (or porn) off the internet is very very old news.

Another falsehood is the Post Courier's statement that "Google Trends indicate almost all Papua New Guineans look up the word 'porn'. That is a false remark, probably part of Dianne Waketsi's demonstration of her incompetence as a reporter.

Ms Waketsi is either oblivious or illiterate that she didn't learn what the "interest ranking" actually refers to. It is a normalised statistics that allows for comparisons between items on a list, such as countries. These are not absolute values. Here is one explanation we got off the internet: For regional analyses this means that you are looking at a normalized indication of search interest within each country. So say you're getting an interest index of 100 in Singapore and an index of 25 in India, that just means that the concentration of Singaporeans searching your keyword are higher than the concentration of Indians searching your keyword. It could mean that Indians are less interested in your product, or they may just search for way more other stuff. This doesn't take into account the difference between countries in size of internet populations and volume of queries per user.

As for the idea proudly displayed by the Post Courier on its front page that Western Highlanders type in the word “pornography” much more than people anywhere else in PNG, with Morobeans behind, and NCD at a fairly low level, this is more nonsense by a ‘reporter’ who apparently doesn’t possess the brain cells to analyse properly. There are only 3 regions even listed by Google Trends as being “regions” of PNG, the ones that are listed. No other data is available.

These statistics are almost certainly meaningless because Google Trends is identifying regions based upon Internet Provider numbers of people using Google. We know for a fact that Digicel often will not display an accurate location for your IP in PNG. For example, in Port Moresby, it will often register that you are surfing the web from Kerema. The “Western Highlands” location could actually including all of the highlands, or part of the highlands and Papua region. We don’t know and neither does the Post Courier. We are probably safe in ignoring this last piece of Waketsi-Rubbish Reporting.

MORE EVIDENCE THAT PAPUA NEW GUINEANS ARE NOT WORLD CLASS GOOGLE SEARCHING PORN SEEKERS

Those who use English as a first language use different descriptive words when doing internet searching for information, compared to those for whom English is a second language. They tend to use more generalized terms because of their more limited vocabulary.

In searching for pornography, people are obviously looking for material that sexually arouses them. In PNG, it makes sense that people who use the internet to find pornography are looking for pornography and that’s all there is to it.

In more educated societies, people become more sophisticated in their perception of sex and what excites them the most, and learn more words that they can use to describe particular sexual techniques and positions. Thus, they are likely to type more precise words into Google to find the specific kind of porn that they’re looking for. There are many sexual positions and deviancies that people can engage in with sex.

There are many heterosexual sexual positions, each of which have their own names (dozens are listed from this site: http://www.urbandictionary.com/define.php…) and many homosexual sexual positions as well.

One web article titled “A Glossary of Rather Grotesque Sex Acts That People in Developed Countries Would Be Googling for” lists many sexual deviancies each of which have their own specialized names: “Alabama Hot Pocket” (Definition: Defecating in the vagina of your partner), “Angry Dragon”, “Angry Pirate”, “Blumpkin”, “Cherry-Vanilla Swirl”, “Carolina Chili Dog”, “Cincinnati Bowtie”, “Cleveland Steamer”, “Cunnilumpkin”, “Dirty Sanchez”, “Donkey Punch”, “Felching”, “Filthy Marx”, “Ghost Load”, “Hot Carl (or Hot Karl)”, “Hot Lips Hulahan”, “Munging”, “Philadelphia Flapjack”, “Pink Sock”, “Rusty Trombone”, “Teabagging” (for actual definitions of all these sexual perversions, go to: http://ibloviate.org/index.php?p=perversion-list, we are NOT going to explain them in this article!!!!!).

To test whether the Post Courier’s conclusion that we are the world’s biggest searchers for pornography on the internet, we can analyse the use of generalized versus specific terms in different countries to find out if this is true or not.

Let us consider a specific sexual position called “doggy style”. Are Papua New Guineans sticking just to the word “pornography” or do we have a genuine addition to online pornography as evidenced by our using all kinds of sex position search words to get the most personally tantalizing kind of porn available on the internet?

We typed in the term “doggy style sex” into Google trends. Papua New Guinea does not show up at all, as expected. Australia is #11 on the list however, followed by the United States, Canada and United Kingdom. However, Kenyans, where President Obama’s father came from, show a 100% ranking in looking for information on doggy style sexual position. In all these countries, people are searching for this specific style of sex.

We tried another term: “missionary position” to see if PNG would appear in the top 25 list, as would be expected if Papua New Guineans were looking for that specific kind of sexual position for finding pornography. We also included the word “video” in our search.

We found that United States was the only country on the list for people seeking out “missionary position videos” in any numbers. Perhaps this sexual position is too boring for the rest of the world.

Our third experiment was to type in “young girls sex video”. Three countries were listed, starting with Pakistan, then India and the United States. No Papua New Guinea on that list.

We then typed in “black girls sex” to see what countries came up as their people using these search terms the most. The returning list contained 19 countries. The top 8 were countries whose populations are primarily black. Papua New Guinea was not on that list either.

What these experiments indicate is that people in other countries are searching for their pornography using multiple terms or more specialized terms. They are not just sticking to the most generalized words. In PNG we do not seem to have reached that level of sophistication. In fact, when we add a single word to the original search, typing in “pornography sex” instead of “pornography” alone, we get a list of 8 countries, none of which include Papua New Guinea.

It is obvious that many other countries could be higher world champions in seeking finding pornography on the internet than Papua New Guinea. Papua New Guineans are sticking to the basics, and we only make one list out of all those generated by our experimental search attempts. The Post Courier purposely spoilt the reputation of our people and our country with Tuesday’s articles, but to what purpose? Once again, Papua New Guinea is a laughingstock because our PNG media published an idiot story.

CASE STUDY: HONOURABLE MP FRANCIS POTAPE

Our MPs are pretty much all on the internet, usually patrolling for women, many of them not using their real name. Most of our PNG MPs seem to be serial adulterers, always looking for a new side girl (or in the well documented Sydney Star Casino case of Beldon Namah, maybe a side boy!). A few MPs, such as Jim Simatab, make their own porn videos and probably are looking for ideas on new videos they are thinking about producing for their collection. MPs as a group are an excellent test case to find out if there are Papua New Guineans who are responsible for a disproportionate percentage of the Google porn seekers, or are the first Papua New Guineans to specialize in to searching for porn that portrays specific sexual deviancies or positions to arouse themselves with.

We picked Francis Potape as our study case. This was because of certain information we found on the social media, which was published a couple years back when Potape, along with 2 other MPs were taken to court by a man who said he was the husband of a woman who said she was having sex with all 3 MPs (see http://www.pngblogs.com/2014/08/mps-group-love.html and http://www.pngblogs.com/2014/08/passing-love-around.html).

In the comments section of these articles, we find a very interesting share story for the readers. Here is the text of 3 comments together:

“Kawas Blade • 2 years ago
After reading all these comments and stories about this three so called love triangles, i can now safely state what i heard and saw. I was on a trip to Thailand late last year and was seated next to this very extremely beautiful girl (Highlands mixrace or a light skin highlander) who appears to me of someone who was educated to a tertiary level and knowledgable. she was having a conversation with another young woman seated next to her and what opened my ears the most was their subject of discussions. mostly was on the legislative changes by the govt (so i assumed they were either lawyers or economists) and their forcast on the png lng after its production. whilst reading my paper i was keeping an open ear as to be honest was interesting. however what really opened my ears and cought my attention was at the end of their inteligent debate, the pretty girl in the midst of her giggling mentioned that she literraly *peed and shited* into one of the mentioned MPs mouth. i tell you i threw up when i arrived at the airport. i wont call the mps name but im sure you all clever people will work it out. lol
cheers !!

TO KAWAS BLADE Kawas Blade • 2 years ago
Instead of being so smart ass that you're sure us clever people can work out the name of the MP, why don't you find some balls to put between your legs and name the MP yourself. What a coward! I don't know who looks more pathetic, the lunatic MP you're describing or your inability to NAME AND SHAME!

Kawas Blade TO KAWAS BLADE • 2 years ago
ok ill let the cat out. its francis potape. yes i beleive in name and shame.”

Interesting! We were curious if there was a term to describe this kind of sexual deviancy that Mr Potape is alleged to preer. We were shocked to find out there is a term for that fetish. It is Coprophilia (also known as coprolagnia) and specifically is a paraphilia where people get sexual pleasure from faeces and urine being sprayed onto them during sex (see: https://drmarkgriffiths.wordpress.com/…/faecal-attraction-…/).

We wondered if people interested in coprophilia are searching for information or maybe videos using Google, so we went back to Google Trends and typed the word in. Google Trends returned with only 2 countries on its list: United Kingdom was #1 and United States was #2. Apparently Mr Potape either doesn’t know the term yet for his favourite sex, or his 7 months in Bomana prison (not for sex crimes!) and more recent power struggle to become governor of Hela Province have been successful at reducing his Google search time to a minimum.

THE POST COURIER MAKING A MOUNTAIN OUT OF AN ANT HILL: FOR WHAT PURPOSE?

In the previous section I wrote playfully about this PNG media fixation on what Papua New Guineans google for with regard to sex and pornography only because it is so ridiculous. Scientific research up to now includes several studies that conclude the liberalization of pornography in society (making it legal) may be associated with decreased rape and other sexual violence rates, with other studies showing no effect or are inconclusive. There are no scientific studies whose results indicate making pornography illegal leads to lower sexual violence. In other words, anyone who pushes the theory that making pornography illegal will make us want to have less violent, aggressive sex, is pushing their bias, not an idea that is backed up by evidence.

Why then did the Post Courier come out with all this nonsense about Papua New Guineans invading the internet looking for pornography, and at this particular time?

The same speculation that followed the recent incident whereby MP Justin Tkatchenko filed a criminal complaint against PNG Blogs for publishing a quickly corrected post that falsely associated him with a Filipino woman arrested for possessing sex toys and drugs comes to mind. There are numerous gossips coming from within the government that the highest officials are determined to stop the embarrassing publications of corruption and sex scandals involving MPs and high level government staff. They can either do this by identifying and prosecuting (but only if the publishers live in PNG) those who have been writing and publishing the articles, or by censoring the internet so that people from within PNG cannot access these articles.

MP Tkatchenko may have focused on a rather trivial PNG Blogs error as an open door to mount a criminal investigation and try for the first goal – to shut down the offending social media sites and publication of further stories that are infuriating the most powerful people in the country, including the Prime Minister.

Creating a false story that Papua New Guineans are overwhelmingly searching for pornography on the internet provides the government with an easy excuse to censor the internet in the name of stopping access to pornography. This allows them to simultaneously move to censor publications that are offensive to the government in power. When the public complains, the government can reply that the censorship was necessary due to the overwhelming addiction of Papua New Guineans trying to find pornography on the internet. This is a classic kind of government propaganda technique, making up a false reason to carry out an intended action. Thus did Hitler find justification for murdering millions of Jewish people by telling the people of Germany that Jews were responsible for the nation’s ills.

Whatever the reason for the Post Courier’s fake news story, it merits further investigation. It would be refreshing if Post Courier “journalist” Dianne Waketsi learnt how to do proper investigative reporting, that Post Courier editor Alexander Rheeney put more attention on truthful reporting rather than sensationalist stories that sold more newspapers, and that they all avoid playing into the government’s hands in creating false stories as the basis for government decisions to censor internet access by Papua New Guineans. We are not a communist country.

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Here are recent articles relevant to this story for your reading enjoyment:

PNG TOPS WORLD IN ‘PORN’ SEARCH by Dianne Waketsi
Post Couier January 17, 2017

According to Google Trends, which monitors Internet search requests, Papua New Guinea is ranked number one in the world as the country with the most searches of the word “porn” in the Google search engine.

Behind PNG are African nations Zimbabwe, Kanya, Botswana, Zambia, Ethiopia, Malawi, Uganda. Fiji sits in ninth spot.

Social media has also played a major role in the distribution of pornography for school-aged children, and adults who share and collect this illicit material.

Chief Censor Steven Mala in a statement during the announcement of the internet filter last year said children with access to a smart phone were able to access these sites which were available freely on the internet.

“These sites are spoiling the mindsets of our young generations,” said Mala.

He confirmed that the Censorship Office was still trying to control what’s coming through the internet.

Mother of three, Jenneifer Lau from Central Province, expressed anger at the Government’s slackness in implementing cyber laws.

“We must put a stop to this now. PNG is a Christian country and such things as pornography is damaging for the young ones,” said Mrs Lau.

“We have the laws already in place, we have to toughen up and start implementing the laws now before everything gets out of control,” she added.

“Pornography is freely available on the internet and some people are making money from it in this country.”

Josh (not his real name) is your average Papua New Guiean youth He enjoys sports, is employed and is very social – but Josh also makes money by selling pirated pornography CDs.

“I started viewing porn in primary school when a classmate brought a stash of pictures belonging to his brother to school. It really opened my eyes then,” said Josh.

“For me, it’s a way of earning an income. Dirty money for my beer, smoke and buai.

“I use my phone to download the movies, transfer them on to a laptop and then burn them onto a CD. This is then distributed to peddlers who sell them at K10 a pop,” said Josh.

He added that most of his CDs are sold by street vendors and because of constant raids by police, the CDs are sold at a cheap rate.

Josh is well aware of the laws involved if caught with pornography but said he is “always careful not to be caught. I erase all material from my phone and laptop once I have burnt the CDs.”

He added that working class men of all age groups buy his products as they are cheap and accessible.

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Editorial
Pornography- PNG’s most uncontrolled internet link
Post Courier January 17, 2017

PNG’s access to the superhighway of information is a blessing in more ways than anyone could have ever thought possible less than 40 years ago.

Little though did anyone think that part of this global technology through the internet would one day elevate PNG to be among the top countries accessing pornography sites around the world.
The thought of this is frightening in itself because of the moral consideration which PNG has found itself tangled with.

The Christian country it is with its high moral values similar to the impeccable tradition of modesty which all tribes practiced and were used to in traditional days are no longer there.
Somehow this standard of morality across many societies in PNG has slipped into the doldrums in the face of this new threat.

Internationally this rating does not do PNG any good than attract global attention because of the many facets that governments elsewhere target to destroy because of the many dangers to society and lives pornography poses.

The Witherspoon Institute in the US says internet as a technological change enables high-powered computing, expanded cable television, and the development of the internet, pornographic images and videos are readily accessible in almost every home and now indeed on almost every cell phone and portable device. The numbers are alarming, with estimates that as much as 35% of all content on the internet is pornographic; that two-thirds of college-age men view pornography with some regularity; that a majority of high school students visit pornographic websites, some trading obscene images of themselves electronically.

For PNG it is a much more serious problem than taken at face value.

International organisations warn of child pornography, threats to international security through porn, the social costs of porn, the cost and legislation.

Yes the Office of the Chief Censor has indicated filtering of internet but perhaps more is required in relation to that.

Findings of research into dealing with the problem calls for increased awareness on the harm of pornography, attention on the part of education professionals on its effects, interests on the part of journalists for rigorous investigations on the local pornography industry and trafficking of images, and campaigns against access to pornography in the workplace and by service providers.

University of Chicago professor Jean Bethke Elshtain argues in The Social Costs of Pornography that we should not dismiss the “moral” in our avoidance of the “moralistic.” Elshtain maintains that in order to be responsible citizens, we must ask ourselves, “What sort of community is this?

Is it reasonably decent and kind? Is it a fit place for human habitation, especially for the young? What happens to the most vulnerable among us? How do we ill-dignify the human body, and how do we forestall such affronts?” Such questions demand long-winded, nuanced answers, yet it is worth seeking these answers.

They are pertinent to those who are involved in the porn industry, and they are pertinent to our own lives. We should all be asking ourselves whether pornography is compatible with a respectful and good society.
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