Papua New Guinea can achieve stronger, more stable, and inclusive growth if it makes significant policy reforms in addition to the implementation of new extractives projects, a new World Bank analysis finds.
Today, a Country Economic Memorandum for Papua New Guinea was launched by the World Bank in PNG, this focuses on long term development.
Papua New Guinea’s economic potential is restrained by excessive macroeconomic volatility, low productivity growth, and excessive reliance on natural resources, while at the same time missing opportunities to take full advantage of its human capital.
World Bank Country Manager for Papua New Guinea Khwima Nthara said, “while Papua New Guinea has made important economic strides in recent years, the gains have not been widely shared by all Papua New Guineans.”
He added that a resource-rich country like Papua New Guinea, has the capacity to achieve more shared prosperity and sustainable growth if it can convert revenues from resource projects into investments in the health, skills and education of its population, and into improved infrastructure.
To achieve stronger and more inclusive economic growth, Papua New Guinea should seek to maintain greater economic stability, boost productivity, and nurture human capital. Challenges for macroeconomic stability and the high risk of debt distress could negatively affect economic growth through reduced investor confidence. Policymakers can address this by continuing with fiscal consolidation with a focus on increasing domestic revenue.
“For Papua New Guinea to better channel its natural resources into broad-based and sustained productivity-driven growth, improvements to the business environment – such as easing business entry and allowing greater competition — could boost investment, encourage positive economic spillovers from extractives industries, and share benefits more widely. Lifting legal and cultural barriers to women’s employment offers an enormous untapped opportunity to strengthen the economy.”
The main author of the report and World Bank Senior Country Economist for Papua New Guinea Ruslan Piontkivsky said, “to get there, Papua New Guinea should expand economic opportunities for all of its population, notably for its growing number of young people and women.”
