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PAPUA NEW GUINEA RAINFOREST CAMPAIGN NEWS

World Bank Said to Resume Loans Shortly, No Word on Forestry Commitments

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Forest Networking a Project of Ecological Enterprises

9/17/96

OVERVIEW & SOURCE by EE

Following is a _National_ newspaper article (the daily owned by Rimbunan

Hijau, PNG's largest industrial logger) which announces that the PNG

government and the World Bank have made a secret agreement to allow the

series of "rescue package" loans to recommence. Remember, that World Bank

had cut off the loans for failure to adhere to loan conditionalities,

including not amending PNG's forestry act and implementing new revenue

measures. The article makes no mention of how the secret negotiations

resolved these matters. Any information y'all have on the matter would be

passed on. Likely, one or both sides are allowed to save face with this

deal while basically the same commitments are now implemented.

g.b.

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RELAYED TEXT STARTS HERE:

World Bank will resume loans soon, says Haiveta

By PETER KRUPKA of AAP

ADELAIDE (Sept 17): Deputy Prime Minister and Finance Minister Chris

Haiveta said his government has reached agreement with the World Bank and

expected payments for the nation's multi-million dollar rescue package to

resume.

Speaking after PNG-Australian ministerial talks here on Friday, Mr Haiveta

said he was optimistic a meeting next week with World Bank representatives

would lead to a second payment of the loan which was in doubt because of

PNG's controversial new logging laws.

He said the Government had started to reap the rewards of its economic

reform program but refused to elaborate on what concessions, if any, were

made to heal the rift with the World Bank, saying the details were between

the bank and PNG.

World Bank officials are due to begin a visit to PNG.

Foreign Affairs Minister Alexander Downer, who headed the Australian

delegation at Friday's forum, was more guarded in his optimism about the

future of the loan.

"We work with the hope there will be an agreement reached between the World

Bank and the government of Papua New Guinea," Mr Downer said.

"They've rebuilt the financial reserves and have done all this in a fairly

difficult environment."

Mr Haiveta said future financial support from the international community

relied on endorsement from Australia, while Mr Downer said the loan was

vital to global investment confidence in PNG.

The forum failed to get closer to a concrete resolution to the eight-year

crisis in Bougainville, with Mr Haiveta thanking Australia for its support

during the crisis and Mr Downer again offering Australia's help to broker a

peace deal.

"We have established the basis for an on-going dialogue about the situation

in Bougainville. In the end this is a matter for Papua New Guinea to

resolve," Mr Downer said.

Defence Minister Ian McLachlan, who was part of the six-man Australian

delegation which also included Treasurer Peter Costello, said all members

had agreed that a review of Australia's A$12 million Defence Cooperation

Program (DCP) was needed.

Mr McLachlan said he would meet with PNG Defence Minister Mathias Ijape

within the next five weeks to discuss changes to the program.

Mr Haiveta acknowledged Australia's decision to quarantine PNG aid from

budget cuts for next year as part of a bid to support the country's

rebuilding program.

But Mr Downer reaffirmed Canberra's commitment to decrease budgetary aid in

future and increase program aid through non-government organisations like

the Red Cross.

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Email (best way to contact)-> gbarry@forests.org