Morauta concerned about sovereign wealth fund

By Malum Nalu

Public Enterprises Minister Sir Mekere Morauta has expressed concern about how that the soon-to-be-created Sovereign Wealth Fund (SWF) will be managed, The National (aka The Loggers Times) reports.

He told the PNG Sustainable Development Program (PNGSDP) annual report at the Crowne Plaza in Port Moresby on Tuesday that despite the incredible mining and petroleum boom in the country, the government’s record was lamentable.

“Transforming resource wealth into better living standards is the biggest single challenge facing our country,” Morauta said.

“If we can set up the SWF properly, keep sticky fingers off the money and channel funds into the right public investments, then the future is bright.

“We need leaders, organisations and the will to make this happen.

“Yes, it (SWF) will help to insulate the economy from Dutch Disease and inflation, and it will smooth out volatile revenue flows,” Morauta said.

“And if it is established properly, the SWF will also keep sticky fingers off the revenues and financial investments.

“But if the money to be drawn down from the SWF flows into an unreformed budget, then we are likely to see a repeat of the same old story: No discipline, no capacity to implement, no accountability; and thus no real development, no improvement in services for our people.

“If the Budget disperses money as it does now over a million and one so-called ‘priorities’, then what can we do to ensure that top priorities, such as maintaining national infrastructure, don’t miss out?

“If the public coffers are vulnerable to corruption and theft, then what can we do to put in place strong governance and accountability mechanisms and regimes?

“If government departments lack capacity and accountability, then what can we do to restructure the service delivery model to deliver results?”

Morauta said government and state-owned utilities needed to collaborate more with PNGSDP in order to deliver better infrastructure and basic services and rural development.

“If we continue to hold national investments hostage to the same government processes and departments that have failed us for so long, then we risk missing out on investing our resource revenues wisely,” he said.

“The last 10 years can be seen as years of lost opportunity and waste of resources:  we cannot afford to repeat the same mistakes and lose the opportunity now dawning before us.

“I believe that we can make a difference now by locking in some sensible decisions on how revenues from the SWF will be allocated, while at the same time putting in place strong organisations to spend the money effectively.

“I’ve therefore argued that the SWF should earmark dividend flows from PNG LNG – about K500m per year – for maintenance of national infrastructure, the provision of rural infrastructure and the recapitalisation of public enterprises.”

Morauta said the SWF that was being established was a new venture for government, but was not PNG’s first major fund for resource revenues.

“PNGSDP’s long-term Fund is a kind of quasi-SWF,” he said.

“It provides lessons for government on how careful investment and conservative management can protect funds, even though events such as the global financial crisis.

“Secondly, PNGSDP also faces the challenge of translating incomes from its resource revenues into infrastructure and services for the people of Western province and PNG.

“As I’ve discussed in the government context, this isn’t an easy task.

“Unfortunately, government can be slow to experiment with new approaches.

“And this is an area where government and PNG SDP should be swapping notes more.”