Fitch grants PNG stable outlook rating
FITCH ratings upgraded both Papua New Guinea’s long-term foreign and local currency ratings from ‘B’ to ‘B+’ and affirmed its short-term foreign currency at ‘B’.
According to the international ratings agency, there is now a stable ratings outlook for the country.
The improved ratings, which were announced last Thursday, will serve as an impetus to draw foreign investors to confidently look at investment opportunities in PNG.
CBonds Market Information website reported Fitch as saying the upgrades recognise, in part, PNG’s establishment of relative political and institutional stability for the sixth successive year and the progress the PNG Government has made in managing public finances.
“Sound economic policies, as well as electoral and structural reforms have set the stage for a relatively stable political environment and facilitated stronger, uninterrupted macroeconomic recovery in the country,” Ai Ling Ngiam, director in Fitch’s Sovereign Ratings team, said.
Prime Minister Michael Somare’s re-election and stronger mandate achieved during the relatively peaceful July 2007 national elections underscores the credibility of policy continuity in the near term.
In addition, the upswing in commodity prices especially oil, gold, gas, copper and silver has supported output from PNG’s primary industry.
The central bank estimates that economic growth was broad-based across all sectors, with the non-mining sectors of communication, construction, agriculture, forestry and fisheries sectors contributing the most.
Increased economic and investment activity contributed to an 11.3% year on year gain in formal employment in non-mineral sectors for the first nine months of 2007, up from 7.3% for the whole of 2006.
After contracting for nine successive years, PNG’s five-year average real per capita GDP growth expanded 1.3% in 2007.
Improved public finances are one of PNG’s rating strengths.
Between 2003 and 2007, PNG’s fiscal surplus outperformed the ‘B’ median deficit by 4.3 percentage points of GDP.
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