PNG Government Moves to Adjust Fuel Subsidy as Marape Warns of Economic Pressure

The PNG Government is preparing to scale back or adjust its fuel subsidy programme as Prime Minister James Marape warns of mounting economic challenges in the lead-up to the 2027 General Elections.

Mr Marape said the combination of election-related spending, continuing El Niño conditions and uncertain global economic trends would make the coming year difficult for the country, urging Papua New Guineans to prepare for tighter financial circumstances.

Prime Minister James Marape

Speaking on the Government’s economic direction, the Prime Minister said more than K1 billion had already been spent on fuel subsidies to help consumers manage high fuel costs.

He said the assistance had provided relief to the public but would now be reviewed to ensure it remained consistent with international fuel prices and the country’s fiscal capacity.

The Government is targeting a balanced budget next year after reducing its deficit to about one per cent, down from nearly nine per cent in 2020.

Mr Marape said the State must maintain financial discipline and reduce borrowing while continuing to provide essential services.

He warned that households should not expect the same level of government assistance as in previous years.

“I appeal to our people to understand that next year will be even tougher, with elections coming up and El Niño continuing,” he said.

The Prime Minister encouraged Papua New Guineans to contribute to economic activity and take responsibility for maintaining stability within their communities.

He said the country’s economic challenges required cooperation, particularly as fuel prices continued to rise.

Mr Marape said the subsidy had allowed PNG consumers to pay less for fuel than people in neighbouring countries and other international markets.

He said the difference was being covered by government expenditure.

“If you look at the price of fuel in Australia and elsewhere, they are paying a much higher price than we are carrying right now,” he said.

“The reason we are paying less is not because of the world price, but because of our government’s subsidy program.”

Despite plans to tighten spending, Mr Marape said education funding would remain protected, covering early childhood, schools, universities and colleges.

The Government would also continue prioritising health services, agriculture recovery and election preparations.

He said the national budget had expanded to more than K30 billion under his administration, compared with less than K16 billion previously.

However, he cautioned that the increase in government spending did not mean the country was free from economic risks.

“Because our budget and economy are bigger now must not give us a false sense of security,” he said.

Mr Marape called on provincial leaders, MPs and government departments to concentrate spending on essential services and projects that would deliver practical benefits to the people.

He said major investments such as the Papua LNG project would remain central to the Government’s efforts to build a stronger economy over the long term.

The Prime Minister said PNG must remain cautious amid global economic instability and work collectively to overcome the challenges ahead.

“All of us must contribute to keeping our economy safer because there is a lot of fragility out there in the global economy,” he said.

“It is going to be a very tough year again. We just have to work together better and harder.”