This was from the executive board of the International Monetary Fund (IMF), in consultation with PNG on November 29, 2016.
“As a commodity exporter, the PNG economy has been hit hard by the drop in world commodity prices and a major drought. The authorities have responded to these shocks through fiscal tightening and a combination of modest exchange rate depreciation and FX sales,” the board said in a statement.
“Strong economic growth driven by the start of the PNG LNG project, has tailed off amidst weak non-resource sector growth.
“Inflation has begun to pick up, reflecting earlier exchange rate depreciation and increases in prices of seasonal agricultural items.”
The IMF said additional fiscal adjustment is needed to ensure debt sustainability over the medium term.
“While the authorities should be commended for promptly passing a supplementary 2016 budget, further adjustment may be needed in view of financing constraints.”
The board has advised that the pace of adjustment should continue to balance the need to maintain debt sustainability against the costs of excessive fiscal adjustment in terms of growth and poverty reduction.
“Priorities for further reform include balance of payments, international investment position and debt data.”