Australia reviews PNG aid

Australia reviews PNG aid

CANBERRA (AFP): Australia's chief diplomat has warned Papua
New Guinea and other Pacific island states they must take hard
economic decisions or face a loss of investor confidence and
lowering of living standards.

Department of Foreign Affairs and Trade secretary Michael
Costello also said Australia would be reviewing its A4300 million
(US$220 million) a year bilateral aid treaty with PNG later this
year.

Australia would have Papua New Guinea's attitude to a proposed
World Bank restructuring package "very much in mind" during the
review, he said.

Costello's warnings followed a World Bank report which found
major obstacles to foreign investment in the island states.

World Bank director Marianne Haug also told South Pacific
finance ministers meeting in Fiji that stricter discipline was
needed to cut waste and enable more money to be spent on human
resources, infrastructure and other developments which promoted
growth.