Papua New Guinea: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Papua New Guinea
IMF Staff Country Reports, December 3, 2018
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- Papua New Guinea: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Papua New Guinea
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Bibliographic details
- Published: December 3, 2018
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484388150.002
Macroeconomic overview and recent performance
- The Papua New Guinea (PNG) economy has grown sluggishly in recent years, reflecting a combination of domestic and external factors.
- External shocks cited:
- adverse terms of trade movements,
- a drought,
- in 2018, a large earthquake.
- Domestic constraints cited:
- difficult fiscal consolidation,
- a shortage of foreign exchange sustained by an overvalued exchange rate,
- import compression,
- weak investment in the non-resource sector.
Fiscal position and public debt
- Progress in 2017-18:
- the new government made important progress in narrowing the fiscal deficit,
- adopted a medium-term revenue strategy.
- Current concerns:
- progress on fiscal consolidation has stalled,
- the debt-to-GDP ratio is well above the medium-term target.
Monetary and exchange rate developments
- Monetary authorities have begun to facilitate exchange rate adjustment and strengthen the monetary framework.
- The report links the shortage of foreign exchange and an overvalued exchange rate to import compression and weak non-resource investment.
Policy analysis and recommendations
- Main macroeconomic challenges for the government:
- finish putting in place policies that will help promote economic stability,
- strengthen the long-term development framework.
- Recommended policy approach:
- more ambitious fiscal consolidation coupled with faster exchange rate adjustment would yield favorable results.
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- Country Report