Countries and Regions

	Table of Contents
p. 7 of 21 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Papua New Guinea

---

II. Country Operational Strategy

A. The Country Operational Strategy

26. The current Country Operational Strategy for PNG, which was discussed by the Board in October 1998, focuses on improved governance, private sector development and improved social indicators.

• Poor governance and inadequate public sector management are the main development problems. The ADB is focusing on supporting the Government to strengthen financial management and to focus public sector management on achieving outputs
• Private sector development is key to achieving long-term income earning opportunities. Improved governance is an important part of the solution. In addition to helping improve performance of the central agencies, the ADB will help improve sector policy and institutional frameworks (especially in agriculture and fisheries), enhance factor productivity (skills development and financial services), and improve market access by selected infrastructure investments (transport) especially in rural areas. Constraints to 'informal' market activity are a clear concern.
• PNG's social indicators remain too low, especially for women. The emphasis must be on rural areas. Again, better governance is key to improved performance. The ADB should continue to lead policy development in the health and urban water supply sectors and to assist infrastructure investments and social service delivery, especially in rural areas.
• The appallingly poor status of women is a central cross-cutting concern, to be addressed, to the extent feasible, throughout the program.

27. It is not envisaged that the Country Operational Strategy will be rewritten to reflect the new emphasis on poverty reduction. However, the increased emphasis on poverty reduction will be reflected in actual application of the Strategy.

28. It was decided in November 1998 that PNG should be graduated from Category B2 to Category C, implying the cessation of access to ADF after 2000, and the progressive reduction in the ADB share of project costs, to a maximum of 40 percent by 2002. PNG has formally requested a reassessment of the situation; this review will be finalized in late 2000.

B. Progress in Implementation

29. The thrust articulated in the Country Operational Strategy has been guiding project processing and implementation since 1998 and is reflected in the 2001-2003 program laid out here. Good governance is central, being addressed both in specifically targeted projects and in projects with other prime objectives.

C. Poverty Partnership Agreement

30. The Government has agreed in principle to work with ADB and the other external agencies to refine the analysis of poverty in PNG, with a view to developing a poverty strategy for PNG. The intent is ultimately to reach a poverty partnership agreement between the Government and the external agencies. Progress to date towards an actual agreement has been limited. However, dialogue is continuing, stimulated not least by the quite recent emergence of visible poverty. The World Bank's publication in late 1999 of a report on poverty, based on 1996 studies, helped to stimulate further debate. It has been agreed that further analysis is warranted, in part to judge the effects of the intervening financial crisis.

Back E. Implementation Assessment	Next III. Sector Strategies