‘Mismatch in export revenue, import expenditure affecting economy’

By DALE LUMA
A MISMATCH in the country’s export revenue and import expenditure is making the economy vulnerable, says PNG-EU business council president Michael Sullivan.
Sullivan said successive governments had promised to restructure the economy but nothing eventuated.
“PNG is an export-driven economy relying on mineral and agricultural products,” Sullivan said.
“These products are subject to the volatile world market prices.
“At the same time, PNG imports most of the manufactured products consumed in the local economy, products which usually have a fixed price. These mismatch between export revenue and import expenditure makes the PNG economy particularly vulnerable.
“Successive PNG governments have promised to restructure the economy so that PNG is less dependent on primary exports and manufactured imports, a greater emphasis on value added exports in particular onshore processing of mineral products.
“Although frequently talked about, it has not really eventuated.”
He said historically, PNG’s boom and bust phenomena had been associated with mineral discoveries and the construction phase of large resource projects.
“Gold discoveries in Bulolo in 1932, and the construction and development of the Panguna gold and copper mine in 1972, the Ok Tedi gold mine in 1984, the Porgera Gold mine in 1989, the Kutubu project in 1992 and the PNG LNG project in 2008 all produced substantial spikes in the PNG economy and generated prosperity,” he said.
“The in between periods however have been much less attractive.”
He said the absence of any new projects following the construction phase of the PNG LNG project had adversely affected the PNG economy for much of the past five years, just as much as fluctuations in the world commodity prices.
“The closure of the Porgera mine in 2020 and delays with the Papua LNG project, the Wafi Golpu project, Pasca offshore project and the P’nyang project have all contributed to a relatively depressed economy in the last five years,” he said.
Sullivan told the second EU-PNG business, trade and investment conference yesterday that gross domestic product growth rates in the past five years reflected this scenario.