Papua New Guinea: 2016 Article IV Consultation-Press Release; and Staff Report

IMF Staff Country Reports, January 30, 2017

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Papua New Guinea faces headwinds stemming from low commodity prices and is recovering from a major drought.
These factors have:
- weighed on economic growth,
- weakened the external position,
- created fiscal challenges.
Foreign exchange (FX) remains in short supply, but inflows have recently picked up somewhat.
Near-term risks to the outlook are tilted to the downside:
- fiscal retrenchment may have a greater impact on the economy than currently expected,
- limited availability of FX continues to constrain imports and economic activity.
A further drop in commodity prices would weaken the external and fiscal positions.

Address FX shortages to avoid further constraints on imports and economic activity.
Carefully manage fiscal retrenchment to mitigate downside risks to growth.
Monitor commodity price developments given their direct impact on external and fiscal positions.
Strengthen public financial management and expenditure planning in the face of fiscal challenges.

Subjects: Budget planning and preparation, Expenditure, External debt, Foreign exchange, Public debt, Public financial management (PFM)
Keywords: allocation mechanism, Asia and Pacific, Budget planning and preparation, CR, deficit, exchange rate depreciation, GDP, GDP deflator, Global, ISCR, Pacific Islands, PFTAC mission, PNG economy, PNG LNG project, PNG NSO staff, real GDP, world commodity price

International Monetary Fund. Papua New Guinea: 2016 Article IV Consultation-Press Release; and Staff Report (IMF Staff Country Reports 2017, 022).