nt
remains at an unacceptably high level.

Papua New Guinea
Papua New Guinea is richly endowed with natural
resources, but exploitation has been hampered by rugged terrain and
the high cost of developing infrastructure. Agriculture provides a
subsistence livelihood for 85% of the population. Mineral deposits,
including oil, copper, and gold, account for 72% of export earnings.
The economy has faltered over the past four years. Former Prime
Minister Mekere MORAUTA had tried to restore integrity to state
institutions, to stabilize the kina, restore stability to the
national budget, to privatize public enterprises where appropriate,
and to ensure ongoing peace on Bougainville. The government has had
considerable success in attracting international support,
specifically gaining the backing of the IMF and the World Bank in
securing development assistance loans. Challenges face Prime
Minister Michael SOMARE, including curbing inflation, gaining
further investor confidence, continuing efforts to privatize
government assets, maintaining the support of members of Parliament,
and balancing relations with Australia, the former colonial ruler.

Paracel Islands
China announced plans in 1997 to open the islands
for tourism.

Paraguay
Paraguay has a market economy marked by a large informal
sector. The informal sector features both reexport of imported
consumer goods to neighboring countries as well as the activities of
thousands of microenterprises and urban street vendors. Because of
the importance of the informal sector, accurate economic measures
are difficult to obtain. A large percentage of the population
derives their living from agricultural activity, often on a
subsistence basis. The formal economy grew by an average of about 3%
annually in 1995-97; but GDP declined slightly in 1998, 1999, and
2000, rose slightly in 2001, only to fall again in 2002. On a per
capita basis, real income has stagnated at 1980 levels. Most
observers attribute Paraguay's poor economic performance to
political uncertainty, corruption, lack of progress on structural
reform, substantial internal and external debt, and deficient
infrastructure.

Peru
Peru's economy reflects its varied geography - an arid coastal
region, the Andes further inland, and tropical lands bordering
Colombia and Brazil. Abundant mineral resources are found in the
mountainous areas, and Peru'