Between 1989 and 1991 when government set up a Forestry Transitional Management Council, there is evidence of a growing involvement of the World Bank (see Filer 1997a). Major policy reviews and statements concerning the forestry sector reflect pressures by the World Bank to achieve certain political, policy and practical outcomes. These pressures contributed to increasing tension in the relationship between the government of Papua New Guinea and the World Bank in this period.
Such tensions were already evident in: the setting up of the Tropical Forest Action Plan (TFAP) for Papua New Guinea; its restructuring into a National Forest Action Plan (NFAP); the circulation of draft National Forest Policy documents; the framing of the new Forestry Bill; statements from the minister of Forests about criteria for exempting projects from the moratorium he himself had announced and implemented; the setting up of a Technical Support Project to support the NFAP; World Bank supervisory missions; and the setting up of a World Bank-funded Forest Management and Planning Project. A third draft of the Forestry Bill (including last-minute amendments that had the effect of watering down some important provisions) was finally enacted by National Parliament in 1991. The World Bank reiterated its concern about the continued non-gazettal of the new Forestry Act; this was finally done in June 1992.
The formation of the Forestry Transitional Management Council in February 1992 brought in a number of outside experts to work on the establishment of the new Papua New Guinea Forest Authority. After another change of government, and another change in the minister of Forests, the PNGFA came into being, and the National Forest Board held its first meeting in December 1992. The NFAP was transformed into the National Conservation Action Programme (NFCAP).
Early in 1993 the National Forestry Development Guidelines (NFDG) were circulated. Soon after, the first of many amendments to the new Forestry Act was approved, reducing the size of the National Forestry Board and separating the position of managing director from that of general manager of the National Forest Service. Later in the year national members of parliament, prompted by landowner companies associated with logging companies, tried to amend the act again, but were opposed by the minister and eventually defeated. Cabinet finally approved the NFDG in December 1993. In May 1994 the government signed a log-export monitoring contract with an international firm, Société-Général Surveillance (SGS), and the following month a major fire destroyed a building containing offices and the basic filing system and project files of the PNGFA.
By September 1994 there was another new government in Papua New Guinea, and a new minister who promised to revise the NFDG to reflect the concerns of resource owners. From this point, the Papua New Guinea government came into increasing conflict with the World Bank over its Economic Recovery Plan (ERP) and associated requirements of a structural adjustment program (SAP). Issues to do with ‘land reform’, remaining from another World Bank project (the Land Mobilization Project), were integrated into the SAP but hurriedly dropped after public outcry and demonstrations. Further amendments to the Forestry Act were proposed, the managing director was sacked, pressures were increased to produce a National Forest Plan, there were visits by World Bank supervisory missions, a new forest revenue system was implemented, and there were threats of non-release of World Bank funding unless certain actions were carried out by the government and the PNGFA.
Following a further change of government in 1997, a World Bank team visited Papua New Guinea to discuss loan conditions (171 in all) for a second SAP, while another Bank mission came to design a Forestry and Conservation Project. By mid 1998, however, a further upheaval in the relationship between the Papua New Guinea government and the World Bank, associated with the appointment of the former World Bank country manager as chief economic adviser to the Papua New Guinea government, marked the beginning of a period of concerted attempts by the government to bypass the World Bank and find loan funding elsewhere. However, by early 1999 negotiations between a World Bank/IMF delegation and Papua New Guinea government officials re-opened.
When the Morauta government came to power in July 1999 it quickly put into place several key planks of a structural reform program designed to address a general ‘crisis of governance’ and restore the lost confidence of the donor community, particularly the World Bank. Forest policy reform was initially not part of this program, but the World Bank persuaded the government that even tougher measures than those imposed in 1997 and 1998 would be required as loan conditions, and a major condition was a moratorium on the issue of new timber permits and extension of existing permits. At the same time, World Bank staff continued to modify the design of the proposed Forest and Conservation Project so that it would complement the forestry and conservation projects notionally to be funded by other international donors.
By the end of 1999 the World Bank had reached broad agreement with other members of the donor community (including international NGOs) about the direction of forest policy in Papua New Guinea for at least the next five to six years. Questions remained about the new government’s capacity to develop real ownership of a reform process which now seemed even more driven by external forces.