Economy ‘suffered’ K1.1bil hit

By DANIEL EALEDONA
PAPUA New Guinea’s economy suffered an estimated K1.1 billion hit with the closure of the Porgera gold mine in 2020, PNG-Europe Business Council president Michael Sullivan says.
Giving an assessment on the PNG economy on Monday, Sullivan explained that the gold mine contributed an estimated 1.8 per cent of PNG’s gross domestic product (GDP) in the year before its closure.
“With a financial loss to the PNG economy being at approximately K1.1 billion, in the price of gold in 2019, the country’s actual loss per annum is considerably more given that from 2020 to 2022 the price of gold increased from US$1,800 (about K6,673) per ounce (28.3g) to US$2,000 (about K7,409),” he said.
Sullivan added that as of August the country’s economy was “a bust” which came about with the closing of Porgera and other additional factors such as the previous economic boom that PNG experienced from the mid 2000’s to late 2014.
He said it was fairly normal for an economy to experience lows, particularly when no new resource development projects had come about, which attracted and strengthened investment opportunities as well as the revenues created from these extractive projects.
However, with the closing of Porgera, the Coronavirus (Covid-19) period in 2020, and the Ukraine-Russia conflict, the lows in the economy had expanded into high inflation on imported goods and services and limited foreign exchange for businesses to buy imported goods and services. Sullivan admitted that these factors along with Porgera’s closure and significantly affected the national economy.
“In economics there are booms and busts,” he said.
“For PNG, the economic boom is on the horizon and will be something unprecedented in the country’s history.”
Sullivan explained that Porgera’s re-opening as expected would impact the country positively with investments and revenue from the first phase of production expected to boost the economy. He predicted that the proposed Papua Liquefied Natural Gas (LNG) development project with other resource project developments like the P’nyang Gas project in Western and offshore Pasca deep sea gas project in Gulf, would make PNG one of the world’s leading suppliers of LNG which was a widely preferred source of energy.
“When Porgera re-opens, this is an indication that PNG’s economy will start to appreciate, we are expecting improvements to the economy by 2024,” he said.