Intemational Bank for Reconstruction and Development FOR OFFICIAL USE ONLY CG2000-9 Public Disclosure Authorized FROM: Vice President and Secretary March 17, 2000 CONSULTATIVE GROUP MEETING FOR PAPUA NEW GUINEA CHAIRMAN'S REPORT OF PROCEEDINGS Port Moresby, Papua New Guinea November 8-9, 1999 Attached is the Chairman's Report of the proceedings of the Eighth Consultative Group Meeting for Papua New Guinea, held in Port Moresby on November 8-9, 1999. The Annexes to the report are listed on the following pages. Public Disclosure Authorized Attachments Distribution For Information Executive Directors for: Australia Korea European Office China New Zealand Tokyo Office France Papua New Guinea Germany United Kingdom Public Disclosure Authorized Japan United States Asian Development Bank Commonwealth Secretariat, Development Cooperation Department of International Development, ODA Development Assistance Committee, OECD European Commission European Investment Bank International Finance Corporation International Fund for Agricultural Development International Monetary Fund Multilateral Investment Guarantee Agency Public Disclosure Authorized United Nations Development Programme This document has a restricted distributionand may be used by recipients only in the performanceof their official duties. Its contents may not otherwisebe disclosed without World Bank authorization. Contents Chairman's Report of Proceedings.................,.1 List of Annexes Annex I List of Participants.21 Annex II Agenda .33 A. Opening Session Annex III Opening Statement by Mr. Klaus Rohland, Chairman World Bank. 35 Annex IV President James D. Wolfensohn's Video Address.37 Annex V Opening Statement by H. E. Sir Mekere Morauta, Head Papua New Guinea Delegation.39 B. Review of Recent Economic Developments Annex VI Statement by Koiari Tarata, Papua New Guinea Delegation.49 Annex VII Statement by Mr. Wilson Kamit, Papua New Guinea Delegation. 53 Annex VIII Statement by the International Monetary Fund Delegation.57 Statements by Other CG Delegations Annex IX Statement by Australian Delegation.59 Annex X Statement by the Japanese Delegation.63 Annex XI Statement by the Asian Development Bank Delegatin.65 Annex XII Statement by the European Commission Delegation.67 Annex XIII Statement by the United Nations Delegation.69 C. Governance and Performance: The Reform Agenda Annex XIV Statement by Mr. Robert Igara, Papua New Guinea Delegation.71 Annex XV Statement by Mr. Cyrus Talati, World Bank Delegation.77 Statements by Other CG Delegations Annex XVI Statement by the Asian Development Bank Delegation............................ 83 Annex XVII Statement by the Japanese Delegation....................................................... 85 Annex XVIII Statement by the United Nations Delegation............................................. 87 Annex XIX Staetment by the European Commission Delegation................................. 89 D. Improving Development Effectiveness Annex XX Statement by Hon. Moi Avei, MP, Papua New Guinea Delegation.......... 93 Annex XXI Statement by Mr. Bill Rahill, World Bank Delegation.............................. 97 Statements by Other CG Delegations Annex XXII Statement by the Asian Development Bank Delegation.103 Annex XXIII Statement by the Australian Delegation.105 Annex XXIV Statement by the European Commission Delegation.107 Annex XXV Statement by the Commonwealth Secretariat Delegation.109 Annex XXVI Statement by the Japanese Delegation. 11 Annex XXVII Statement by the United Nations Delegation.113 E. External Assistance Requirements Annex XXVIII Statement by Mr. Camillus Midire, Papua New Guinea Delegation....... 115 Annex XXIX Statement by Mr. Daniel Weise, World Bank Delegation....................... 121 Pledging Statements Annex XXX Statement by the United Nations Delegation........................................... 123 Annex XXXI Statement by the European Commission Delegation............................... 125 Annex XXXII Statement by the Asian Development Bank Delegation.......................... 129 Annex XXXIII Statement by the Australian Delegation.131 iii Annex XXXIV Statement by the Japanese Delegation............................................... 133 Annex XXXV Statement by the Chinese Delegation............................................... 137 Annex XXXVI Statement by the New Zealand Delegation.............................................. 139 Annex XXXVII Statement by the French Delegation............................................... 141 Annex XXXVIII Statement by the United Kingdom Delegation........................................ 143 Annex XXXIX Statement by the United States Delegation.............................................. 145 F. Closing Session Annex XL Statement by Hon. Moi Avei, MP, Papua New Guinea Delegation........ 147 Annex XLI Summary Statement by Mr. Klaus Rohland, Chairman.......................... 151 Annex XLII Press Release............................................... 155 CONSULTATIVE GROUP FOR PAPUA NEW GUINEA CHAIRMAN'S REPORT OF PROCEEDINGS The Eighth Consultative Group (CG) for Papua New Guinea (PNG) met in Port Moresby on November 8-9, 1999. The Papua New Guinea delegation was led by Hon. Sir Mekere Morauta, Prime Minister, Treasurer and Minister of Health, and included nine Government Ministers and ten other senior government officials. The meeting was chaired by Klaus Rohland, Country Director for PNG and Pacific Islands, of the World Bank. Participating in the two-day discussions were representatives from Australia, China, France, Japan, Korea, New Zealand, United Kingdom and the United States. Also in attendance were representatives from multilateral and other institutions including the Asian Development Bank, Commonwealth Secretariat, European Commission, Forum Secretariat, International Monetary Fund, United Nations, United Nations Children's Fund (UNICEF), United Nations Family Planning Agency (UNFPA) and the World Health Organization (WHO). The two-day donor meeting also included observers from the Institute of National Affairs, the Consultative Implementation and Monitoring Council, the National Council of Women, the Council of Churches, the National Volunteer Services and the National Association of Non-GovernmentalOrganizations. On the first day of the meeting, discussions focused on the overall development needs of the country, including promoting good governance, sustaining macroeconomic stability, improving public sector performance as well as improving the quality of life for the people of PNG. Donors expressed their support for revived development efforts in PNG including a special emphasis on oversight agencies, fighting corruption, and service delivery in health and education. They also encouraged more prompt implementation of the Government's proposed economic and structural reform program. The second day of the meeting was devoted to a discussion of aid assistance, including funding for the Government's proposed reform program. Donors expressed their support for the mobilization of a financing package in support of the Government's economic recovery and reform efforts. The proposed assistance package would be anchored in an IMF Stand-by Arrangement and a World Bank structural reform program. Also discussed at the meeting was the Rural Development Fund and the necessity to upgrade the accountability framework as well as the government's thrust to promote development at the district and village level through the proposed Rural Development Program (RDP). Background documentation for the meeting included the World Bank's 1999 country economic memorandum: Papua New Guinea: Improving Governance and Performance. Other documentation comprised the World Bank's proposed Country Assistance Strategy (CAS) prepared this year as well as a 1999 poverty report, entitled: Papua New Guinea: Poverty and Access to Public Services. - 2 - The report that follows is an illustrative summary of the proceedings. Complete texts of donor statements are provided as annexes. - 3 - A. Summary of the Opening Session Opening Statement by the Chairman After welcoming the delegates, the Chairman underscored the importance of the Eighth Consultative Meeting for Papua New Guinea (PNG), emphasizing its timeliness in offering development partners a fresh start in their efforts to consolidate their support for the implementation of the Government's proposed economic and structural reform program, the subject of discussion for the meeting. The Chairman commended the Prime Minister for his leadership since taking office in mid-1999, noting the solid policy platform the Government had announced in support of economic development and structural reforms. He also noted progress made by the Government in the formulation of the 2000 budget to be considered by Parliament at end-November, 1999. Against this backdrop, the Chairman set forth four objectives for the meeting: * Hear an update of the government's economic and structural reform program as well as achieve a common understanding on the status of discussions between Government of PNG and multilateral agencies expected to support the government's reform efforts; * Achieve a common understanding on the sequencing of assistance packages expected from development partners and the factors that would trigger funds disbursements; * Improve understanding and coordination among donors in meeting PNG's development needs; and * Hear an update of donors programs and confirm pledges of financial assistance to PNG. Following adoption of the agenda, the Chairman called