Australian Aid to PNG - AusAID

4.4 Involving Other DonorsPapua New Guinea, more than most developing countries, has consistentlyrelied on a single donor – Australia – for its development assistance financing.Until 1982, Australian budget support alone accounted for some 95% of theforeign grants received by Papua New Guinea. 14 By 1987–88, it still accountedfor 80% of Papua New Guinea’s total aid receipts. 15 At that time, in tandemwith the fundamental shift in the nature of the aid relationship that had beenagreed by the two governments, it was envisaged that other donors wouldgradually start to play an increasing role in Papua New Guinea’s development.Papua New Guinea invited the World Bank to establish a Consultative Group,and the inaugural meeting held in May 1988 succeeded in achieving broaderinternational support for Papua New Guinea’s development strategies. Althoughsubsequent meetings of the Consultative Group have stimulated an expansionand diversification of the country’s aid sources, Papua New Guinea todayremains heavily reliant on Australian aid, which currently accounts for about72% of its total bilateral aid. Japan is the next largest bilateral aid donor.Multilateral institutions such as the Asian Development Bank (ADB), the WorldBank, the United Nations (UN), and the European Union (EU) also providesubstantial support.External resources can best assist economic growth, poverty alleviation andbroad development if domestic economic policies in the recipient country aresupportive. Accordingly, AusAID has devoted considerable resources to researchand analysis to strengthen the policy dialogue between Australia and PapuaNew Guinea, particularly since 1990. It was the first Australian bilateral aidprogram to invest heavily in policy research and analysis, an initiative intendedto provide practical support for the changing nature of the developmentpartnership between the two countries articulated in the 1987 Joint Declarationof Principles. These analytical reports are still regarded as the best informationproduced internationally in relation to Papua New Guinea, and wereinstrumental in engaging other donors in Papua New Guinea’s development.These efforts to broaden Papua New Guinea’s base of external finance andadvice have lost momentum in recent years. The last Consultative Groupmeeting was held in November 1999. This has been unfortunate, coincidingwith a period in Papua New Guinea’s development when the country hasprobably most needed the coordinated support of a cohesive body of donors.The independent aid policy priorities and programming and delivery processesof each donor (including Australia) have added to the complexity of aid14 Desk Study: Papua New Guinea (Literature Review), AusAID, May 1984.15 Australia’s Overseas Aid Program 1987–88, Budget Related Paper No. 4, Australian Government PublishingService, 1987.30 The Contribution of Australian Aid to Papua New Guinea’s Development 1975–2000