Economic Outlook for Papua New Guinea Remains Positive Despite Risks, Says IMF
The International Monetary Fund (IMF) has released a mid-year report indicating that Papua New Guinea's (PNG) economic outlook for the medium term remains positive but is fraught with risks. The IMF highlighted that the commencement of significant resource projects, not yet included in the baseline scenario, could enhance economic growth, export gains, and fiscal revenues in the medium term.
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| Economic Outlook for Papua New Guinea Remains Positive Despite Risks, Says IMF [Downtown Port Moresby File Photo] |
However, the report also pointed out PNG's vulnerability to domestic and external shocks, exacerbated by public debt, foreign exchange shortages, and capacity constraints. These factors could impede the government's ability to implement economic stabilization and development policies effectively.
The IMF projects that PNG's economic growth will rise to 4.6% this year, up from 2.9% last year, driven by the resumption of activities at the Porgera gold mine and favorable commodity prices. Inflation is expected to return to its historical average of around 5%.
At the end of last year, PNG's gross international reserves were comfortably positioned at USD 3.9 billion (approximately K12 billion), equivalent to 6.6 months of total imports, providing a buffer to continue central banking reforms.
IMF Deputy Managing Director and Acting Chairman Bo Li emphasized the importance of accelerating the implementation of the medium-term revenue strategy to mobilize domestic revenue sustainably. He also highlighted the need for improvements in public expenditure management to ensure efficient spending.
Li noted that the IMF’s extended credit facility and extended fund facility arrangements would continue to support PNG's reform agenda, addressing balance of payment needs, rebuilding buffers, and attracting support from other international partners. He assured that the IMF would provide timely technical assistance and advice to aid reform implementation.
Li also mentioned PNG's vulnerability to climate change and severe climate-related disasters. He commended the country’s commitment to reforms, stating that all end-December 2023 quantitative performance criteria and indicative targets were met, and most structural benchmarks were implemented.
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