AS A DECADE OF STRONG economic growth comes to an end, Papua New Guinea’s policy makers face new challenges to achieve lasting improvements in living standards.
The World Bank recommends continued efforts to reduce costs of regulation; to support a dynamic private sector, and to ensure government authorities translate public funds into effective goods and services.
Economists say that this will help PNG meet its long-term employment and service delivery priorities even in the face of returning economic pressures.
“Papua New Guinea has enjoyed almost ten years’ strong, good quality economic growth but there are challenges on the horizon,” says Laura Bailey, World Bank Country Manager for PNG.
“Ensuring the public sector is at its most effective and accountable will be key to ensuring the government can continue to meet the needs of its people.”
In its latest Economic Update, the World Bank found that PNG’s economic growth in 2012 remained high at about 8%. However this was one percent slower than in 2011, attributed to the stronger kina and weakening international commodity prices, which led to lower-than-expected rural incomes and government revenue.
The report also predicts PNG’s growth will slow markedly in 2013 and 2014. It says that financing spending priorities in future years will become more difficult because of slower, more heavily resource-driven economic growth, weaker public revenues, and fewer new resources investments in the pipeline.
“The government is looking to broaden and extend the boom to meet a pressing human development agenda,” says Tim Bulman, World Bank Country Economist for PNG.
“Despite the projected slowdown, smart investments today will help build on PNG’s many successes in recent years - notably in achieving broadly-based growth that has benefitted more sectors of the economy.”