Papua New Guinea: Year in Review 2019
Papua New GuineaEconomy
A rebound in the mining and resource industries helped drive stronger economic growth in Papua New Guinea in 2019, a year which saw Peter O’Neill’s eight-year tenure as prime minister end.
Prime Minister O’Neill resigned in late May following a series of policy disputes and defections within the government. He was replaced on May 30 by James Marape, the former minister of finance.
In a break with his predecessor, Prime Minister Marape has struck a somewhat nationalistic tone since taking office, setting out an agenda to find a more even balance between the interests of investors and Papua New Guineans amid a perception that the country has not adequately benefitted from foreign-funded, resource-based projects in the past.
Elsewhere, the new administration has sought to diversify the economy by prioritising growth in non-resource sectors, small and medium-sized businesses, and the informal economy.
A key pillar of this strategy involves agriculture, with Prime Minister Marape telling OBG in a recent interview that he aims to turn the country into the “food bowl for Asia” by expanding production and export capabilities.
To this end, the government announced it would invest PGK200m ($58.7m) annually in the sector through to 2030, while in late August the EU inaugurated a PGK340m ($99.8m) pilot programme designed to benefit smallholder farms in East Sepik Province.
Another sign of the new economic approach was revealed in late November with the release of the 2020 budget, the country’s largest ever.
The budget outlined expenditure of PGK18.7bn ($5.5bn), 13.3% more than in the 2019 supplementary budget. Much of the spending will be directed towards capital investment, with a particular focus on electricity, internet and road infrastructure improvements seen as key to unlocking non-resource growth. While revenue is also expected to reach record levels, the budget foresees a deficit of PGK4.6bn ($1.4bn) in 2020, or roughly 5% of GDP.
See also: The Report – Papua New Guinea 2019