Strengthening The Rules-Based Fiscal Framework in Papua New Guinea: Papua New Guinea
Selected Issues Papers, June 19, 2025
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- Strengthening The Rules-Based Fiscal Framework in Papua New Guinea: Papua New Guinea
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Bibliographic details
- Authors: Yue Zhou, Bryn Welham
- Published: June 19, 2025
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798229012164.018
Key findings
- Papua New Guinea’s public debt has increased significantly in recent years, leading to a high risk of debt distress and exposing significant gaps in the existing fiscal setting.
- The paper proposes strengthening the authorities’ fiscal framework by introducing a clear public debt anchor and a primary balance rule.
- The primary balance is recommended as an operational policy instrument to facilitate the convergence of public debt to its anchor.
Proposed fiscal framework
- Medium-term public debt anchor: set at between 30 and 40 percent of GDP.
- Rationale: a medium-term debt anchor of between 30 and 40 percent of GDP is intended to ensure that the debt limit of 60 percent is not breached under most scenarios.
- Operational rule: use the primary balance rule to drive convergence of public debt toward the medium-term debt anchor.
Policy implications and recommendations
- Introduce a clear public debt anchor to reduce the high risk of debt distress.
- Adopt a primary balance rule as the operational instrument for fiscal policy to ensure steady convergence toward the debt anchor.
- Design the anchor and rule so the statutory debt limit of 60 percent of GDP remains protected under most scenarios.
Key statistics and identifiers (as presented)
- Pages: 24
- Volume: 2025
- Issue: 084
- Series: Selected Issues Paper No. 2025/084
- DOI: https://doi.org/10.5089/9798229012164.018
- Stock No: SIPEA2025084
- ISBN: 9798229012164
- ISSN: 2958-7875
- Publication date: June 19, 2025
- Authors: Yue Zhou, Bryn Welham
Source: Strengthening The Rules-Based Fiscal Framework in Papua New Guinea: Papua New Guinea, Selected Issues Papers (June 19, 2025) by Yue Zhou and Bryn Welham.
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- Sipea2025084