This is because Australia’s Aid program to PNG will increase over the next five years under the PNG-Australia partnership for development agreement signed by the two prime ministers last August.
PNG will receive a total of A$388.5 million, or 734 million kina, in development assistance during Australia’s financial year 2008-09.
Costello was responding to questions from The National on the possible impact of the depreciating Aussie dollar on its development assistance to PNG due to the global financial crisis.
But, he agreed that if the PNG kina maintained a strong position against the dollar, this would somewhat reduce the “purchasing power” of the large elements of the Australian aid program.
“However, exchange rate variations would not affect the range of activities undertaken through the aid program…instead programs would be managed within the available funds,” he said.
“There will be no one project or sector targeted for cuts due to the exchange rate depreciation…rather program managers would work within the funds,” Costello added.
“Expansion in certain areas including plans to address the growing HIV epidemic is not possible at present,” he said.
The PNG-Australia partnership for development commits both nations to work together toward common goals in key areas.
Institute of National Affairs director Paul Barker said the strong kina would certainly see Australian aid reduced in kina terms.
This is despite moves to increase funding as has been the case in recent years which will continue over the next five years.
But he said the strong kina had made it cheaper for PNG to purchase Australian produce which had assisted to help reduce inflation in food and other prices.
