{ "title": "IMF Executive Board Concludes 2018 Article IV Consultation with Papua New Guinea", "publication": "IMF News, December 3, 2018", "sourceUrl": "https://www.imf.org/en/news/articles/2018/12/03/pr18451-papua-new-guinea-imf-executive-board-concludes-2018-article-iv-consultation", "canonical": "https://www.imf.org/en/news/articles/2018/12/03/pr18451-papua-new-guinea-imf-executive-board-concludes-2018-article-iv-consultation", "overlayPath": "/en/news/articles/2018/12/03/pr18451-papua-new-guinea-imf-executive-board-concludes-2018-article-iv-consultation/index.md", "summary": "Real sector (percentage change) - Real GDP growth: 2014: 15.4; 2015: 5.3; 2016: 1.6; 2017: 2.5; 2018 Est.: 0.0; 2019 Proj.: 3.8 - Resource: 2014: 69.2; 2015: 39.0; 2016: 6.3; 2017: 4.3; 2018 Est.: -6.8; 2019 Proj.: 8.3 - Non-resource: 2014: 7.0; 2015: -3.1; 2016: -0.1; 2017: 1.8; 2018 Est.: 2.6; 201", "publishDate": "2018-12-03", "sections": [ { "heading": "Macroeconomic outlook and recent developments", "content": "- 2018 growth was adversely affected by a large earthquake that temporarily halted production in much of the resource sector; overall GDP growth for the year is estimated to be close to zero.\n- Growth is projected to recover to 3.8 percent in 2019 as resource output returns to normal.\n- Inflation eased to around 4½ percent, driven by weak demand and improved agricultural supply.\n- PNG faces a shortage of foreign exchange despite a large current account surplus; large resource export revenues are almost entirely offset by resource project debt repayments and dividends.\n- Rationing of foreign exchange has dampened growth.\n- International reserves stood at $1.7 billion at end-2017, equivalent to 5 months of imports.\n- Monetary authorities have begun addressing the foreign exchange problem by facilitating exchange rate adjustment, increasing the supply of foreign exchange, and strengthening the monetary framework." }, { "heading": "Fiscal position and public debt", "content": "- The new government narrowed the fiscal deficit in 2017-18 and adopted a medium-term revenue strategy, but progress on fiscal consolidation has stalled and the debt-to-GDP ratio is well above the medium-term target.\n- Executive Directors welcomed confirmation of the government’s long-term debt/GDP target of 30 percent and the adoption of a zero non-resource primary balance as a medium-term objective.\n- The recent issuance of a debut sovereign bond was welcomed; authorities intend to use the funds to improve the domestic public debt profile and help resolve foreign exchange shortages.\n- Directors encouraged continued strengthening of the fiscal framework and noted that near-term additional fiscal consolidation is needed to reduce the risk of debt distress.\n - Suggested consolidation measures include a combination of increases in revenue and reductions in spending, particularly on the government wage bill and grants.\n - Directors welcomed the government’s commitment to domestic revenue mobilization through implementation of its Medium-Term Revenue Strategy and noted a significant increase in tax revenue through strengthened compliance and tighter government payroll controls.\n- Directors welcomed progress in strengthening public financial management." }, { "heading": "Exchange rate, foreign exchange operations, and financial sector", "content": "- Directors agreed that greater exchange rate flexibility pursued in recent months should be continued to support growth in the non-resource sector.\n- Eliminating the backlog of foreign exchange orders and strengthening liquidity management and foreign exchange operations would support re-establishment of an interbank foreign exchange market.\n- Carefully monitoring the impact of foreign exchange measures on the financial sector is important.\n- Directors welcomed authorities’ intention to seek better terms in negotiations for new resource projects and to develop a framework for managing resource revenues." }, { "heading": "Structural and governance priorities", "content": "- Development of the non-resource sector should be fostered through provision of public services and infrastructure and be considered in revenue mobilization.\n- Directors supported elimination of corruption and strengthening of governance as important parts of PNG’s development strategy and commended recent progress.\n- Improvements in macroeconomic statistics were welcomed; further progress is needed to improve data completeness, timeliness, and accuracy. Additional technical assistance was supported." }, { "heading": "Risks and scenarios", "content": "- Near-term risks: roughly balanced.\n - A weakening of global growth could lower commodity export prices, dampening growth and making fiscal adjustment more difficult.\n - Reforms to exchange rate policy could have a more favorable impact on growth than expected.\n- Medium-term risks: skewed to the upside owing to the likelihood that new resource sector projects will begin to get underway." }, { "heading": "Executive Board assessment — key messages", "content": "- Growth in 2018 remained sluggish due to low commodity prices and earthquake impacts on oil, gas, and mineral exports; expected to strengthen in 2019.\n- Strengthening macroeconomic policies and implementing structural reforms would reduce risks and support inclusive longer-term growth.\n- Adoption of an expenditure rule consistent with the revenue target would help reconcile fiscal targets and guide budget policy.\n- Continued efforts to strengthen domestic revenue mobilization, public financial management, and statistics are important." }, { "heading": "Key statistics and indicators (selected, as presented)", "content": "- Nominal GDP (2016): US$21.1 billion 1/\n- Population (2016): 7.9 million\n- GDP per capita (2016): US$2,353\n- Quota: SDR 131.6 million (14th Review: SDR 263.2 million)\n\nReal sector (percentage change)\n- Real GDP growth: 2014: 15.4; 2015: 5.3; 2016: 1.6; 2017: 2.5; 2018 Est.: 0.0; 2019 Proj.: 3.8\n- Resource: 2014: 69.2; 2015: 39.0; 2016: 6.3; 2017: 4.3; 2018 Est.: -6.8; 2019 Proj.: 8.3\n- Non-resource: 2014: 7.0; 2015: -3.1; 2016: -0.1; 2017: 1.8; 2018 Est.: 2.6; 2019 Proj.: 2.2\n- Agriculture, forestry and fishing (share): 2014: 17.8; 2015: 18.4; 2016: 18.5; 2017: 18.2; 2018 Est.: 18.7; 2019 Proj.: 18.6\n- Mining and quarrying (share): 2014: 9.1; 2015: 7.7; 2016: 8.0; 2017: 7.6\n- Oil and gas extraction (share): 2014: 11.3; 2015: 14.1; 2016: 15.0\n\nPrices and monetary indicators\n- CPI (annual average): 2014: 5.2; 2015: 6.0; 2016: 6.7; 2017: 5.4; 2018 Est.: 4.8; 2019 Proj.: 4.7\n- CPI (end-period): 2014: 6.6\n\nCentral government operations (percent of GDP)\n- Revenue and grants: 2014: 20.9; 2015: 19.3; 2016: 17.6; 2017: 17.9; 2018 Est.: 16.7\n - Of which: Resource revenue: 2014: 2.3; 2015: 1.1; 2016: 0.7; 2017: 1.0; 2018 Est.: 0.5\n- Expenditure and net lending: 2014: 27.2; 2015: 24.1; 2016: 22.8; 2017: 20.3; 2018 Est.: 20.8; 2019 Proj.: 19.0\n- Net lending(+)/borrowing(-): 2014: -6.3; 2015: -4.8; 2016: -5.2; 2017: -2.7; 2018 Est.: -2.9; 2019 Proj.: -2.2\n\nMoney and credit (percentage change)\n- Domestic credit: 2014: 12.8; 2015: 23.5; 2016: 15.9; 2017: -1.0; 2018 Est.: 10.5; 2019 Proj.: -7.6\n- Credit to the private sector: 2014: 3.5; 2015: 3.4; 2016: 7.2; 2017: -3.6; 2018 Est.: 3.1\n- Broad money: 2014: 10.9; 2015: 0.9; 2016: 16.5; 2017: -10.5\n- Interest rate (182-day T-bills; period average): 2014: 7.1; 2015: 7.4; 2016: 8.1\n\nBalance of payments (in billions of U.S. dollars)\n- Exports, f.o.b.: 2014: 8.8; 2015: 7.8; 2016: 8.7; 2017: 9.7; 2018 Est.: 9.6\n - Of which: Resource sector\n- Imports, c.i.f.: 2014: -4.5; 2015: -2.0; 2016: -2.5; 2017: -3.2\n- Current account (including grants): 2014: 0.3; 2015: 2.4; 2016: 4.5; 2017: 4.9; 2018 Est.: 5.1; 2019 Proj.: 1.3\n- Gross official international reserves: 2014: 11.8; 2015: 23.7; 2016: 23.9; 2017: 23.0 (in months of goods and services imports)\n - Gross official international reserves (in billions of U.S. dollars): 2016: 1.9; 2017: 1.7\n- Government gross debt: 2014: 27.1; 2015: 32.3; 2016: 37.8; 2017: 37.5; 2018 Est.: 36.8; 2019 Proj.: 36.2\n- External debt-to-GDP ratio (in percent) 3/: 2014: 6.2; 2015: 7.9; 2016: 10.2; 2017: 15.1\n- External debt-service ratio (percent of exports) 3/: 2014: 1.4\n\nExchange rates and terms of trade\n- US$/kina (end-period): 2014: 0.3855; 2015: 0.3325; 2016: 0.3150; 2017: 0.3060\n- NEER (2005=100, end-period): 2014: 114.2; 2015: 116.4; 2016: 104.2; 2017: 101.0\n- REER (2005=100, end-period): 2014: 123.6; 2015: 131.4; 2016: 124.0\n- Terms of trade (2010=100, end-period): 2014: 97.4; 2015: 102.0; 2016: 93.4; 2017: 85.0; 2018 Est.: 87.0; 2019 Proj.: 84.8\n\nNational accounts (kina)\n- Nominal GDP (in billions of kina): 2014: 56.8; 2015: 57.1; 2016: 59.6; 2017: 65.5; 2018 Est.: 70.8; 2019 Proj.: 75.2\n- Non-resource nominal GDP (in billions of kina): 2014: 45.2; 2015: 44.7; 2016: 45.9; 2017: 50.2; 2018 Est.: 55.4; 2019 Proj.: 58.1\n\nItalic: IMF Executive Board Concludes 2018 Article IV Consultation with Papua New Guinea (Press Release No. 18/451), December 3, 2018.\n\n---\n\n Content in this bundle\n\n- cr18352\n - cr18352 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - cr18352 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- The Executive Board\n- Guinea and the IMF\n- Papua New Guinea and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2018/12/03/pr18451-papua-new-guinea-imf-executive-board-concludes-2018-article-iv-consultation" } ], "bullets": [ "[Markdown version](/en/news/articles/2018/12/03/pr18451-papua-new-guinea-imf-executive-board-concludes-2018-article-iv-consultation/index.md)", "[Structured JSON version](/en/news/articles/2018/12/03/pr18451-papua-new-guinea-imf-executive-board-concludes-2018-article-iv-consultation/index.json)", "[Bundle manifest](/en/news/articles/2018/12/03/pr18451-papua-new-guinea-imf-executive-board-concludes-2018-article-iv-consultation/bundle-manifest.json)", "Published: December 3, 2018", "2018 growth was adversely affected by a large earthquake that temporarily halted production in much of the resource sector; overall GDP growth for the year is estimated to be close to zero.", "Growth is projected to recover to 3.8 percent in 2019 as resource output returns to normal.", "Inflation eased to around 4½ percent, driven by weak demand and improved agricultural supply.", "PNG faces a shortage of foreign exchange despite a large current account surplus; large resource export revenues are almost entirely offset by resource project debt repayments and dividends.", "Rationing of foreign exchange has dampened growth.", "International reserves stood at $1.7 billion at end-2017, equivalent to 5 months of imports.", "Monetary authorities have begun addressing the foreign exchange problem by facilitating exchange rate adjustment, increasing the supply of foreign exchange, and strengthening the monetary framework.", "The new government narrowed the fiscal deficit in 2017-18 and adopted a medium-term revenue strategy, but progress on fiscal consolidation has stalled and the debt-to-GDP ratio is well above the medium-term target.", "Executive Directors welcomed confirmation of the government’s long-term debt/GDP target of 30 percent and the adoption of a zero non-resource primary balance as a medium-term objective.", "The recent issuance of a debut sovereign bond was welcomed; authorities intend to use the funds to improve the domestic public debt profile and help resolve foreign exchange shortages.", "Directors encouraged continued strengthening of the fiscal framework and noted that near-term additional fiscal consolidation is needed to reduce the risk of debt distress.", "Directors welcomed progress in strengthening public financial management.", "Directors agreed that greater exchange rate flexibility pursued in recent months should be continued to support growth in the non-resource sector.", "Eliminating the backlog of foreign exchange orders and strengthening liquidity management and foreign exchange operations would support re-establishment of an interbank foreign exchange market.", "Carefully monitoring the impact of foreign exchange measures on the financial sector is important.", "Directors welcomed authorities’ intention to seek better terms in negotiations for new resource projects and to develop a framework for managing resource revenues.", "Development of the non-resource sector should be fostered through provision of public services and infrastructure and be considered in revenue mobilization.", "Directors supported elimination of corruption and strengthening of governance as important parts of PNG’s development strategy and commended recent progress.", "Improvements in macroeconomic statistics were welcomed; further progress is needed to improve data completeness, timeliness, and accuracy. Additional technical assistance was supported.", "Near-term risks: roughly balanced.", "Medium-term risks: skewed to the upside owing to the likelihood that new resource sector projects will begin to get underway.", "Growth in 2018 remained sluggish due to low commodity prices and earthquake impacts on oil, gas, and mineral exports; expected to strengthen in 2019.", "Strengthening macroeconomic policies and implementing structural reforms would reduce risks and support inclusive longer-term growth.", "Adoption of an expenditure rule consistent with the revenue target would help reconcile fiscal targets and guide budget policy.", "Continued efforts to strengthen domestic revenue mobilization, public financial management, and statistics are important.", "Nominal GDP (2016): US$21.1 billion 1/", "Population (2016): 7.9 million", "GDP per capita (2016): US$2,353", "Quota: SDR 131.6 million (14th Review: SDR 263.2 million)", "Real GDP growth: 2014: 15.4; 2015: 5.3; 2016: 1.6; 2017: 2.5; 2018 Est.: 0.0; 2019 Proj.: 3.8", "Resource: 2014: 69.2; 2015: 39.0; 2016: 6.3; 2017: 4.3; 2018 Est.: -6.8; 2019 Proj.: 8.3", "Non-resource: 2014: 7.0; 2015: -3.1; 2016: -0.1; 2017: 1.8; 2018 Est.: 2.6; 2019 Proj.: 2.2", "Agriculture, forestry and fishing (share): 2014: 17.8; 2015: 18.4; 2016: 18.5; 2017: 18.2; 2018 Est.: 18.7; 2019 Proj.: 18.6", "Mining and quarrying (share): 2014: 9.1; 2015: 7.7; 2016: 8.0; 2017: 7.6", "Oil and gas extraction (share): 2014: 11.3; 2015: 14.1; 2016: 15.0", "CPI (annual average): 2014: 5.2; 2015: 6.0; 2016: 6.7; 2017: 5.4; 2018 Est.: 4.8; 2019 Proj.: 4.7", "CPI (end-period): 2014: 6.6", "Revenue and grants: 2014: 20.9; 2015: 19.3; 2016: 17.6; 2017: 17.9; 2018 Est.: 16.7", "Expenditure and net lending: 2014: 27.2; 2015: 24.1; 2016: 22.8; 2017: 20.3; 2018 Est.: 20.8; 2019 Proj.: 19.0", "Net lending(+)/borrowing(-): 2014: -6.3; 2015: -4.8; 2016: -5.2; 2017: -2.7; 2018 Est.: -2.9; 2019 Proj.: -2.2", "Domestic credit: 2014: 12.8; 2015: 23.5; 2016: 15.9; 2017: -1.0; 2018 Est.: 10.5; 2019 Proj.: -7.6", "Credit to the private sector: 2014: 3.5; 2015: 3.4; 2016: 7.2; 2017: -3.6; 2018 Est.: 3.1", "Broad money: 2014: 10.9; 2015: 0.9; 2016: 16.5; 2017: -10.5", "Interest rate (182-day T-bills; period average): 2014: 7.1; 2015: 7.4; 2016: 8.1", "Exports, f.o.b.: 2014: 8.8; 2015: 7.8; 2016: 8.7; 2017: 9.7; 2018 Est.: 9.6", "Imports, c.i.f.: 2014: -4.5; 2015: -2.0; 2016: -2.5; 2017: -3.2", "Current account (including grants): 2014: 0.3; 2015: 2.4; 2016: 4.5; 2017: 4.9; 2018 Est.: 5.1; 2019 Proj.: 1.3", "Gross official international reserves: 2014: 11.8; 2015: 23.7; 2016: 23.9; 2017: 23.0 (in months of goods and services imports)", "Government gross debt: 2014: 27.1; 2015: 32.3; 2016: 37.8; 2017: 37.5; 2018 Est.: 36.8; 2019 Proj.: 36.2", "External debt-to-GDP ratio (in percent) 3/: 2014: 6.2; 2015: 7.9; 2016: 10.2; 2017: 15.1", "External debt-service ratio (percent of exports) 3/: 2014: 1.4", "US$/kina (end-period): 2014: 0.3855; 2015: 0.3325; 2016: 0.3150; 2017: 0.3060", "NEER (2005=100, end-period): 2014: 114.2; 2015: 116.4; 2016: 104.2; 2017: 101.0", "REER (2005=100, end-period): 2014: 123.6; 2015: 131.4; 2016: 124.0", "Terms of trade (2010=100, end-period): 2014: 97.4; 2015: 102.0; 2016: 93.4; 2017: 85.0; 2018 Est.: 87.0; 2019 Proj.: 84.8", "Nominal GDP (in billions of kina): 2014: 56.8; 2015: 57.1; 2016: 59.6; 2017: 65.5; 2018 Est.: 70.8; 2019 Proj.: 75.2", "Non-resource nominal GDP (in billions of kina): 2014: 45.2; 2015: 44.7; 2016: 45.9; 2017: 50.2; 2018 Est.: 55.4; 2019 Proj.: 58.1", "**cr18352**", "[The Executive Board](http://www.imf.org/external/np/sec/memdir/eds.aspx)", "[Guinea and the IMF](http://www.imf.org/external/country/GIN/index.htm)", "[Papua New Guinea and the IMF](http://www.imf.org/external/country/PNG/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "related": [ { "title": "cr18352", "role": "report", "sourceUrl": "https://www.imf.org/-/media/files/publications/cr/2018/cr18352.pdf", "summary": { "path": "/-/media/files/publications/cr/2018/cr18352.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/cr/2018/cr18352.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/news/articles/2018/12/03/pr18451-papua-new-guinea-imf-executive-board-concludes-2018-article-iv-consultation/index.md", "json": "/en/news/articles/2018/12/03/pr18451-papua-new-guinea-imf-executive-board-concludes-2018-article-iv-consultation/index.json", "bundleManifest": "/en/news/articles/2018/12/03/pr18451-papua-new-guinea-imf-executive-board-concludes-2018-article-iv-consultation/bundle-manifest.json" }, "generatedAtUtc": "2026-09-25T22:22:54.372Z" }