Countries and Regions

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p. 3 of 4 BACK | NEXT I. Current Development Trends and Issues II. Implementation of the Country Strategy and Program III. Portfolio Management Issues IV. Country Performance and Assistance Levels

Country Strategy and Program Update 2003-2005: Papua New Guinea

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III. Portfolio Management Issues

A. Portfolio Performance

25. Since joining ADB in 1971 until the end of 2001, PNG has received 55 loans totaling $849 million, and 117 TA projects totaling $39 million. The current loan portfolio consists of 13 loans, of which 1 is not yet effective. The activities underlying the Health Sector Development Program are still being implemented, although the corresponding loans have been disbursed and closed. After a slight improvement in 2000, portfolio performance deteriorated again in 2001, with inadequate implementation as the primary problem. In terms of development objectives, 12 loans are rated as satisfactory and only 1 as partially satisfactory. In terms of implementation, nine loans are rated satisfactory, while three are problem projects (two partially satisfactory, one unsatisfactory); one more is a potential problem project. Thus, 4 of the 13 loans, or 31% of the total, are "at risk," which is above the ADB-wide average of 24%, and implies that both the Government and ADB need to focus on improving implementation. In 2001, the overall contract awards ratio was 21.9%, above the ADB-wide average of 14.9%. However, if program loans are excluded, the contract awards ratio is only 7.5%, below the ADB-wide average of 13.0%. Actual contract awards totaled $43.6 million, or 73% of the projection, compared with 76% of the projection in 2000. In 2001, the disbursement ratio was 20%, compared with the ADB-wide average of 21%. Actual disbursements were $44.7 million or 97% of the projection. Details of portfolio performance are in Appendix 1, Tables A1.6-9.

26. Many factors underlie the inadequate performance. Bureaucratic delays in starting projects, notwithstanding extensive preparatory actions, have been especially problematic. Delays in hiring consultants and in procurement, due in large part to weak legal capacity, are contributing factors. Releases of counterpart funds have been delayed. ADB is working with the Government to improve performance. Bureaucratic obstacles are being addressed; the State Solicitor's Office is being strengthened through the ongoing public service program, with assistance from other development partners; and procedures are being reviewed jointly with the World Bank.

B. Performance Monitoring and Evaluation

27. Past government monitoring and evaluation focused largely on individual investment initiatives, evaluating the rate of implementation and impact at the close of the project. ADB supported these efforts through its loan projects. To refocus the public sector on performance, the Government intends to intensify activity monitoring and evaluation, and ADB is supporting public sector reform and strengthening management.

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