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Do you know if any (and how many) remittances might possibly use bitcoin or cryptocurrencies? Or is this not really feasible for the pacific? See <a href="https://theconversation.com/bankers-are-about-to-ensure-money-transfers-go-underground-34487" rel="nofollow">this article</a> from last year. And <a href="http://cointelegraph.com/news/113171/moneygram-bitcoin-really-is-not-being-used-for-remittance" rel="nofollow">this</a>. There was a lot about this option in 2014 but I have not seen so much this year.

Thanks Nic for an interesting comment. Like Garth you've convinced me I was being too conservative in what I've asked for. Is the Green Climate Fund something that would normally be expected to be funded from aid? (Sorry, these funds are not something I know as much about as I should). If it is, then given the commitment you mention, not only should the govt not cut aid but it should, at the very least, add $50M/yr if it wants its pledges to be anything more than an exercise in robbing Peter to pay Paul. Terence

I just read a tweet stating “Exchange rate brings the economy to a stand-still” and a link to this article. Some comments if I may … Which economy are we talking about? The markets seem to be thriving and of course the other parts of the informal sector that most live in. One resilient thing about PNG is that the bomb could drop and life would go on as normal for many. And it hasn’t (yet) to pay for huge social security entitlements and suchlike that other economies are chained to. Do you mean the Mining sector – well, commodity prices might have something to do with that? And I believe the LNG boast that PNG is already one of their lowest costs producers. Hence a competitive advantage. Do you mean the Agricultural sector – well, oil palm producers say low or high – the exchange rate is a double edged sword. If low – the price of importing fertilizer/spare parts etc. is a killer, if high – the PNG costs of production are greater. Or are we talking coffee? With the ongoing drought, not to mention ongoing structural factors like roads, it’s hard to see a lower exchange rate making much of a difference. Anyway, consistent “quality” to my mind would ensure high demand for this commodity. It’s already a good price. Are we talking the Transport sector? The low price of fuel currently must be a real profitable boon for all transport providers, not to mention others who have fuel as a major cost i.e. PNG Power. Will a lower exchange rate make a difference? Is it Tourism? Again personal security, fear of malaria and suchlike as well as structural & visa issues – seem to be the root cause of slowness in this sector. One bright light does seem to be the recent endeavours in this area though and invest in the sector. Australian tourists I speak to already seem to think that the rate is pretty good i.e. K2 fo $1. How low is low?? I remember when K1=$1. Or perhaps Construction? Imagine the prices of hardware and building materials (most imported) if we have a large devaluation. Will that be good for the economy? Certainly not for anyone thinking of buying a house. I haven’t mentioned Manufacturing as I’m not sure what we manufacture that has a significant impact on the economy. Tinned fish? Forestry? Surely you’re not implying a lower exchange rate would help the loggers become more competitive and that would be a good thing. I’m pretty sure they can sell their product. Likewise with Fisheries. Anyway, every graph I look at has shown a steep decline in the PNG rate against US since BPNG’s actions 18 months or so ago. It is devaluing in a seemingly controlled way and the ridiculous profiteering and exploitation by currency traders has also been managed - as has any wild swings in exchange rates that could happen if hedge funds and that like cast their eye on PNG. If the fact that the rate against the AUD$ and others has held its own is the issue – is that such a big deal? Haven’t those currencies been largely overvalued for some time and they too are depreciating as the US gains strength. If there is capital flight – perhaps it might have something to do with alarming analysis! As for large multi-nationals finding it difficult to send funds out for purchases or other reasons – I’m pretty sure they have repatriated their profits for some years and can’t believe they don’t have ways and means of paying the bills if they really want to during the hard times. These companies move funds around all the time. If they have to keep a larger amount in the country for a period, sobeit. The economy is, after all, growing (faster than Australia's I believe) - with perhaps some big projects around the corner. All our jobs are to keep it growing and steer through these stormy seas. Sorry, you seem to be wearing De Bono’s black hat and I thought I’d put on some other colours for the sake of advocating another point of view and to challenge some assumptions. Not based on international experience but from more micro observations within the PNG context and from living and doing business “on the ground” here. Happy to be wrong – just thought I’d comment in case there is any group think going on.

With the Prime Minister travelling soon to Paris, its also important to look at how the ODA program will be integrated into Australia's commitment to climate financing. In Lima last year, Australia committed A$200 million over four years to the Green Climate Fund (GCF) and recently resumed its role as co-Chair of the Fund. These welcome steps follow a lengthy hiatus where the Abbott government refused to support or contribute to the Fund. A key problem is that neither major political party in Australia has explained how they will contribute our fair share of international climate financing. The current global objective of US$100 billion of public and private funds each year means Australia should contribute more than A$2 billion annually. Recent cuts to the aid budget and the lack of other mechanisms to raise revenue (through carbon taxes, Tobin taxes or the like) means Canberra will struggle to match recent pledges from other OECD countries (Labor relied on the ODA budget for our Fast Start Finance in 2010-12, and refused to use any revenues from the carbon tax for our international obligations). A central pillar of any deal in Paris will be adequate, predictable and sustained climate financing. With most climate funds currently flowing to major energy and infrastructure projects in larger developing nations, our Pacific island neighbours want to ensure that more revenues are focused on adaptation as well as mitigation, and that funding mechanisms are adapted to the capacities of small island states. Minister for International Development and the Pacific Steven Ciobo has pledged that Australia will advocate for the interests of our Pacific neighbours at the GCF. But islanders want to speak in their own voice and have created mechanisms - such as the Pacific Small Island Developing States (PSIDS) group at the United Nations - to advance their own agenda on environment and development.

Thanks Richard. Can you draw out the causal pathway between aid, aid dependence and poorly functioning economies? The title of the post implies that aid dependence has effects, but beyond an assertion that aid dependence exists, and it is bad for economies, the post doesn't clearly spell out the relationship. Keen to get your reflections on this.

Thanks Ash - a good lesson all around about not over claiming regarding what any particular intervention can do.

Thanks for these links--I found the cookstoves one really interesting, as I've read some critiques of it before, but it was interesting to see it laid out in the WaPo article. For those interested in the topic, last year I <a href="https://devpolicy.org/in-brief/are-clean-cookstoves-a-cooked-up-solution-to-sexual-violence-20140807/" rel="nofollow">wrote about</a> some research around the claims that many orgs doing clean cookstoves work were also arguing that they were a tool to end sexual violence in refugee camps-- something that researchers argued was not the case.

Hi Colin, Please allow me to thank you sincerely for your effort in taking on the huge problem we face in PNG. The trend we have now will force many people become to become beggars on our own soil that we rightfully own. I hope the Government of the day will plan and look ahead of our up coming generation in the many years to come. I love this site free to air my views Regards, Charlie

Thanks Garth. Very good point.

Very useful and informative post, thank you.

I agree with the direction of your call Terence. However if the Turnbull Government is going to signal a change of policy from the continuous aid cuts of the Abbott period and convince electors that it is committed to aid it will need to do more than just avoid the next cut and ensure that the aid budget does not drop below its current 0.25% of GNI. I can't imagine the Prime Minister wants to go down in history as the Prime Minister who cut Australian aid to its lowest level of generosity ever but that is what will happen if he only maintains the 2015-16 aid budget in real terms. Given Australia's current low rate of growth in nominal GNI, preventing a further fall in the ODA/GNI ratio would not cost a lot of dollars, and as you say, have no material impact on Australia’s fiscal health. But it would have a real impact on Australia's and the PM's reputation and on Australia's aid partners.

Thanks Michael. I'm inclined to think that Bishop opposed the cuts both on the basis of her body language during the budget speech, and also simply because no Minister likes their budget slashed. That said, as you say, the proof is in the pudding, and if the current government wants anyone to take seriously its claims to being committed to aid it will need to do something tangible -- specifically, can the next round of cuts. Terence