World Bank Program--Including Forest Project--Back on Track

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PAPUA NEW GUINEA RAINFOREST CAMPAIGN NEWS

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Forest Networking a Project of Forests.org

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http://forests.org/web/ -- Discuss Forest Conservation

11/14/99

OVERVIEW & COMMENTARY

I need to excuse myself from commenting on the following story,

having worked for some two years as a consultant for the World Bank

in development of the Papua New Guinea Forestry and Conservation

project discussed below (and continuing to do so on a very part-time

basis). Here are two stories from a local newspaper on the recent

breakthrough regarding international assistance to PNG, and how

forests figure as an issue in the discussion.

g.b.

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ITEM #1

Title: Landowners to gain from World Bank funded forest project

Source: The Independent

Date: November 11, 1999

Byline: NEVILLE CHOI

LANDOWNERS and all other parties of Forest Management Agreements

(FMA) in Papua New Guinea will be more involved and informed about

their projects and returns once a proposed PNG Forestry and

Conservation project partly funded by the World Bank and the

Global Environmental Facility (GEF) begins operation.

The project is aimed at improving the environmental sustainability of

forest harvests and to implement, for the first time, a country-wide

strategy to promote conservation and small-scale sustainable

enterprises.

The project, which is now part of an economic reform package proposed

by the government of Prime Minister Sir Mekere Morauta with the World

Bank, was in danger of being scrapped late last year when a series of

questionable decisions in the forestry sector raised serious concerns

with the World Bank. Nearing the completion of the final project

appraisal document earlier this year, several decisions by the last

government of then Prime Minister Bill Skate through the National

Forest Authority and the National Forest Board threatened to disrupt

the appraisal process.

The decisions were:

* The allocation of a large concession extension to the largest

timber concession in PNG through a process outside normal procedure;

* The fast-tracking of new logging operations where provincial forest

management committees were directed to "fast-track" a number of new

operations;

* The amending of the Forestry Act to legitimise the fast-track

approach of approving logging operations;

* The elimination of the SGS log export monitoring program for the

purposes of export tax avoidance;

* The reducing of budget allocation and staffing in the Forest

Authority, undermining the authority's capability to support major

forest projects;

* Changes to the log export tax structure, resulting in virtually no

tax being paid by logging firms; and

* The repeal of a forest concession to The Nature Conservancy who had

negotiated the concession at Josephstaal in Madang to demonstrate

good concession practice and sustainable forest management, but had

the concession withdrawn, only to be given to a commercial operator.

These decisions prompted a letter from World Bank Country Director

for PNG, East Asia and the Pacific Region Klaus Rohland.

In several letters to then Deputy Prime Minister and Minister for

Treasury and Planning, Iairo Lasaro, Mr Rohland said that the

decisions and other developments within the forestry sector had

serious implications on the continuation of project discussions and

the bank's program in PNG.

In another letter to Mr Skate, World Bank Acting Vice President of

the East Asia and Pacific Region, Julian Schweitzer voiced similar

concerns.

"There have been recent developments in the forestry sector which

raise serious concerns. These developments appear to undermine policy

reforms proposed under the Forestry and Conservation Project and

threaten further potential reforms being considered under the Social

and Economic Development Program.

"Large concession extensions, fast tracking of new logging

operations, possible amendments to the Forestry Act, log export

monitoring and recent changes in the export tax are cases in point.

"We are nearing completion of the appraisal process for the Forestry

and Conservation Project. Maintaining high standards of governance

and transparency in the forestry sector is crucial for the further

processing of this loan as well as the Social and Economic

Development Program Loan. You have previously stated your commitment

to the conservation and sustainable management of your country's vast

forest resources repeatedly in the past, and we hope therefore that

we can continue to count on your firm determination in this regard,"

Mr Schweitzer's letter read.

Earlier this year, the World Bank did not receive satisfactory

responses from the previous government, but according to the Bank's

forest advisor Jim Douglas, the decisions and cases highlighted then

are now being looked into by the Ombudsman Commission.

Mr Douglas told The Independent that the project is also part of the

current government's economic reform package and discussions with the

new forestry minister have been constructive.

He also highlighted that what needs to be done now is that there

should be a moratorium imposed on logging project applications and a

comprehensive review done on all existing logging applications.

Mr Douglas said that he was currently in the country discussing with

all concerned interest groups and added that the forest minister had

indicated his interest in bringing together all the interest groups

involved in the forest sector to discuss on what they can agree on

regarding forest issues.

Mr Douglas said that preparations for the project and further

discussions with international forestry and conservation

organisations would commence some time early next year.

Although the World Bank will be co-funding the project, Mr Douglas

maintains that it is now up to the interest groups in the forest

sector in PNG to take the reins and come together to help conserve

the country's forests. He said that the project would see increased

involvement by all parties in forestry.

"The perception is that if people don't know what is happening, if

they don't know what's in forest management agreements, if they don't

know what the decisions of the board are, if they are not told these

things, naturally, they suspect the worst. I would like to see that

the decisions of the board are made fairly and not only that, that

the decision is subject to review after a 28-day period," he said.

The project proposes to control and eventually stop deforestation,

biodiversity and habitat loss and the economic marginalisation of

affected landowners by improving landowner participation in forest

use decisions, improving their access to the benefits of sustainable

forest management and their awareness regarding forest management and

conservation issues.

The project will also see the implementation of a forest conservation

strategy that will be fully compatible with clan-based land

ownership, and based upon the promotion of conservation based

alternatives to intensive forest utilisation, through the

establishment of a trust endowment fund to provide in-country funding

of such activities.

It will also work to improve the PNG government's capacity to plan,

implement and enforce sustainable and environmentally responsible

forest management, and upgrade the government's capability to assess

the environmental acceptability of resource operations and review or

reject proposals to be followed by effective monitoring.

ITEM #2

Title: Confidence in PNG shown through cash commitment

Source: The Independent

Date: November 11, 1999

Byline: NEVILLE CHOI

A COMMITTED amount of over $US500 million in financial assistance

from international donors, the World Bank and the International

Monetary Fund (IMF) has been recognised as international confidence

in the country.

Prime Minister Sir Mekere Morauta on Tuesday announced a commitment

of more that $US200 million in "extraordinary" financial assistance

for the year 2000 from the World and the international donor

community.

"This is a clear and strong endorsement of the economic, political

and social reform programs that my government began on the first day

it came into power. It tells the world that Papua New Guinea is a

country worthy of the confidence of the international investment

community," Sir Mekere announced. "It tells the people of Papua New

Guinea that there is at last some hope of an end to the terrible

times they have gone through because of the corruption, economic

mismanagement and incompetence of previous administrations."

The $US200 million is a separate requirement over and above the

finance to be made available under a World Bank and IMF Structural

Adjustment Program. The World Bank, IMF and the Asian Development

Bank and donor countries also supported a $US300 million plus

Structural Reform Program for PNG.

"This is the first reform program devised entirely by Papua new

Guinea and for it to get the response that it has is a strong

indication of the policies that my government has developed and begun

to implement," Sir Mekere said.

He said however, that although there was still a long way to go, the

assistance from the World bank, IMF and donor countries was an

"excellent start".

He said he was optimistic that with the success of the supplementary

budget the 2000 budget would be a balanced one with the solid

foundation provided by the supplementary budget.

"In the last two weeks we have reached agreement with the World Bank

and the IMF on the broad framework for the 2000 budget. The two

agencies broadly approve of the thrust of the budget and in the last

two days donor countries have also come on board. This is a

significant achievement given the extremely limited time we have had

to work in," Sir Mekere said on Tuesday.

Sir Mekere also revealed that after the handing down of the budget,

the government would undertake the privatising of all significant

government enterprises over the next three years. He said that

commitments had already been given by the World Bank, IMF and donor

countries.

"It requires a great deal of expertise to carry out properly so that

the people of Papua New Guinea get the best possible price for the

assets that they own, so that jobs are not lost, so that private

enterprise provides the best and cheapest services possible and so

that Papua New Guinea's home-grown entrepreneurs get the opportunity

to invest in their own country's future.

"This country cannot advance the well-being of its people while

services are not being delivered or are delivered at a price that

the people cannot afford. Carefully considered privatisation,

involving full consultation with all stake holders, is what we are

aiming for and the commitment of international expertise to our

endeavors is a crucial breakthrough.

"Donor agencies and countries have also formally agreed in the last

two days to help us strengthen our institutions so that when our

economic and business reforms are completed we will have in place

appropriate policies and regulations that will stimulate economic

growth rather than strangle it," he said.

Institutions that will receive priority include the Bank of Papua New

Guinea, the Auditor-General and the Ombudsman Commission.

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