Prime Minister Peter O’Neill says they expect this growth trend to continue into the next medium term.
Business houses at this morning’s Port Moresby Chamber of Commerce and Industry breakfast were told that the Government intends to ensure that the economy continues its steady growth over a long period of time.
Prime Minister Peter O’Neill also used the opportunity to reveal that Cabinet approved the 2019 budget yesterday.
“And that again shows a strong sign of recovery. The indications are very, very positive,” he said at the Hilton Hotel this morning.
“As a government we have tried our very best to manage our economy in a responsible way so that it continues to provide the stability that the business community and our country needs.”
The Prime Minister said the Government has invested in infrastructure, agriculture, tourism and SMEs in an effort to stimulate the economy for the long term.
He stated that support from international partners, including the World Bank, International Monetary Fund and the Asian Development Bank, has proven the confidence that stakeholders have in PNG.
However, in spite of this reported growth, tangible results have yet to be seen on ground, with health facilities nationwide reporting a shortage in medical drugs and consumables, public servants’ still facing pay and accommodation issues and hefty taxes and high cost of living burdening citizens.
Furthermore, in April 16th this year, Standard & Poor’s Global Ratings lowered its long-term foreign and local currency sovereign credit ratings on PNG, to 'B' from 'B+'.
“We have downgraded our rating on PNG as result of much slower economic growth than we previously expected and compared with peers, and lower-than-we-expected government revenues leading to fiscal deficits and rising government debt and debt service costs,” explained S&P.
“Lower-than-we-expected tax revenues from PNG's largest liquefied natural gas (LNG) project's exports, along with natural disasters such as drought and earthquakes, have hindered revenues in recent years. While the government has made some headway on the expenditure side by cutting some (sic) superfluory expenditure, weak controls over payroll costs somewhat offset these gains.
“These fiscal deficits, along with slower economic growth, have pushed the government debt to GDP ratio over the ceiling of 30 percent, and we forecast it to increase to about 40 percent by 2021.
“Our ratings on PNG reflect structural constraints inherent in a lower-middle-income economy dependent on extractive industries and served by weak institutions, restricted monetary policy flexibility, and increased government debt. These are balanced by longer-term economic growth prospects, underpinned by expected new LNG projects.”
(Filepic of PNG’s informal sector)