High Economic Growth: Inequality To Increase

Papua New Guinea will soon experience high economic growth, but the concern now, is the problem of inclusiveness, which is still lagging.

Despite the start of Liquefied Natural Gas exports later this year, which is expected to increase PNG’s Gross Domestic Product levels, the inequality gap between rich and poor is also expected to widen.


According to the Asian Development Bank’s new report, the start of LNG exports will support PNG’s GDP growth of 6% this year, to a record 21% next year. However, it was highlighted in the Bank’s Development Outlook, that despite the expected high GDP rate, the gap between the rich and poor will increase.


ADB’s Country Director, Marcelo Minc, said this rising inequality will affect the rural population who depend heavily on agriculture. He said poor planning and management of funds in provincial governments, will contribute to diminishing social sector indicators.


“Poor prioritization of provincial governments’ own source revenues, unpredictable transfers of funding from national to provincial government, and weak implementation structures, have all diminished the impact of this public spending on social welfare,” Mr Minc said.


ADB’s Country Economist, Aaron Batten, said the focus now must be placed on narrowing inequality to ensure future growth is sustainable.


Mr Batten said proper fiscal policy must be in place, and he encouraged the government to continue funding the key priority areas, as way forward for addressing this inequality.


“Increase of government budget to these key priority areas of health, education, law and order, and infrastructure development, will heal this indifference in our communities” he said.


Mr Batten said this inequality gap will widen because growth outside of the mining and petroleum sector is very slow.


Mr Batten said at present, the value of kina is going down due to the winding down of the LNG construction.

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