Rebounding agro sector boosts PNG economy


A REBOUNDING agricultural sector and improving efficiency in liquefied natural gas production are recent highlights of the Papua New Guinea economy, says a World Bank report.
However, it said growth slowed in this year because of necessary public spending adjustments, coupled with foreign currency shortages.
The Papua New Guinea Economic Update, the first in a new twice-yearly series from the World Bank, was launched yesterday in Port Moresby. It aims to provide ongoing analysis of PNG’s economy.
The Government had initiated efforts to stimulate the economy and inclusive growth through its 100-day economic stimulus plan.
The World Bank country director for PNG and the Pacific Islands, Michel Kerf, said: “The 2018 Budget, in conjunction with the medium-term fiscal and revenue strategies, provides further evidence of the government’s intent to strengthen the fiscal framework.
“Commitments to reinforce resilience to fluctuating commodity prices by disentangling government spending from volatile resource revenues, and plans to establish the sovereign wealth fund are particularly encouraging. Strong efforts must be made to contain wage bill costs, which are straining funds available for key public services.”
Government revenue in the first half of the year grew by 6.7 per cent, less than the 15 per cent expected in the Budget, while spending had been higher than planned, necessitating the cuts to capital spending announced in the 2017 Supplementary Budget.
Despite these immediate challenges, the economic outlook appears more positive next year, with real GDP growth projected to increase to 2.5 per cent from 2.1 per cent in 2017.
According to the report, PNG is establishing itself as an efficient, low-cost producer of LNG, positioning the country well for future investment in the sector.
Moving forward, the report suggested that the Government will need to carefully consider the terms for any future LNG project to maximise benefits accrued to the citizens of Papua New Guinea.
The report said it was important to create an enabling environment
for the non-resource sector to flourish.