Countries and Regions

	Table of Contents
p. 17 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

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V. Donor Activities and Aid Coordination

49. Official development assistance has been a major source of financing for PNG. In the 1980s, budget support from Australia accounted for more than a third of public expenditure. Although external assistance is falling, in recent years it has still accounted for about 7 percent of gross national product. Aid administration by the Government traditionally has been weak, leading to a series of organizational changes introduced to improve matters. Since 1995, aid coordination has been handled by the Foreign Aid Management Division, within the planning bureaucracy. The World Bank chairs the Consultative Group for PNG; the last meeting was held in November 1999; another meeting is scheduled for late 2000.

50. Australia is the main development partner, currently providing A$300 million per year. There has been a dramatic shift in the composition of Australian assistance, away from budget support to 'jointly programmed aid', with budget support phased out from mid-2000. Under the recently concluded new treaty, Australia will provide up to A$300 million per year of project assistance. The shift to project assistance requires careful donor coordination to ensure sound use of donor funds. Japan is the second largest bilateral donor, and has recently financed projects in education and transport (airports and roads). Japan also is a major contributor to the 2000 structural adjustment effort. Smaller bilateral donors include Germany, New Zealand, and Taipei,China. The overall external assistance is shown in Appendix 3.

51. The World Bank's strategy in PNG stresses improving delivery and effectiveness of public services; promoting economic development and employment creation through macroeconomic stability, liberalizing trade and investment regimes, and improving capital markets; and improving governance in the use of public funds. The United Nations agencies, notably UNDP, play a significant coordinating role; their primary focus is on sustainable human development. The International Monetary Fund provides extensive technical assistance support on monetary, fiscal and banking matters, and remains central to the macro stabilization efforts.

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