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Papua New Guinea borders the Coral Sea, the Southern Pacific Ocean, and Indonesia. The country's geography is diverse. A spine of mountains, the New Guinea Highlands, runs the length of the island forming a region covered with dense rainforests. The government system is a constitutional parliamentary democracy and a Commonwealth realm; the chief of state is the queen of the United Kingdom, and the head of government is the prime minister. Although much of the population relies on subsistence farming, Papua New Guinea has a mixed economy in which a lack of a market economy has resulted in state monopolies in some sectors of the economy. Papua New Guinea is a member of the Asia-Pacific Economic Cooperation (APEC). Show how this country compares to others. If you continue to navigate this website beyond this page, cookies will be placed on your browser. To learn more about cookies, click here. We provide a wide array of financial products and technical assistance, and we help countries share and apply innovative knowledge and solutions to the challenges they face. Data and research help us understand these challenges and set priorities, share knowledge of what works, and measure progress. It is one of the most diverse countries in the world; home to eight million people and more than 800 different languages spoken among a population divided into more than 10,000 ethnic clans across 600 islands. The country occupies the eastern half of the West Pacific island of New Guinea, together with the main islands of New Britain, New Ireland, and the Autonomous Region of Bougainville, as well as another 600 smaller islands and atolls. PNG’s population of eight million people is young and growing. PNG’s growth trajectory and abundant resource potential provides a strong platform for greater economic engagement with Asia and beyond.
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The country’s economy remains dominated by two broad sectors: the agricultural, forestry, and fishing sectors that engage most of PNG’s labor force (the majority informally); and the minerals and energy extraction sector that accounts for the majority of export earnings and GDP. To diversify PNG’s sources of revenue and increase employment, investment is needed to strengthen capacity in institutions, human capital, and physical infrastructure like electricity, telecommunications, road and other transport infrastructure that remain critical to supporting private sector-led growth. PNG has complex cultural dynamics deeply rooted in tribal and ethnic identity, traditional social institutions, and relationships to the land. These contribute to both the country’s unique challenges as well as its considerable resilience. There are limited formal job opportunities for the growing employment age population and other risks include environmental management, population growth, political fragmentation, inequalities in PNG’s resource dominated economy, and social exclusion. This will lead to a larger fiscal deficit, financing gaps, and higher unemployment and poverty than previously anticipated prior to the onset of the COVID-19 pandemic. With such a highly dispersed and remote population with 87 of Papua New Guineans living in rural areas, the consequences of a COVID-19 outbreak in PNG has the potential to be devastating. The future resilience and economic growth of the country will depend on how its health system responds to the pandemic in 2020. The World Bank continues to support the Government of PNG to strengthen macroeconomic management and improve service delivery to ensure development benefits reach Papua New Guineans, particularly given 87 of Papua New Guineans live in rural areas. The commitment is part of a wider package of World Bank support to tackle a number of PNG’s most pressing health challenges.
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This new project aims to address the quality and efficiency of health services being delivered in clinics and hospitals across the country. Long-term support to PNG was outlined in May 2019 when the World Bank and PNG Government agreed on the 2019-2022 Country Partnership Framework for Papua New Guinea. Strengthening governance in both the natural resources sector and across management of public resources underpins the World Bank’s strategy in PNG. The strategy aims to ensure everyone, regardless of their gender, where they live, or their social and economic circumstances, will benefit equally from the World Bank’s work to support PNG’s development goals. The Human Capital Index shows that, on average, a child born today in PNG will be only 38 as productive when he or she grows up as they would have been if they had access to optimal health and education services. Based on these results, PNG was one of the first countries worldwide to commit to the Human Capital Project. The World Bank is also strengthening its analysis of PNG’s economic challenges and prospects, with the publication of twice-yearly PNG Economic Update reports. Daru, a small island in Western Province, is a global hot spot for multi-drug-resistant TB. Patient treatment drop-out rates have now reduced from 30 to zero on Daru Island. The Productive Partnership in Agriculture Project (PPAP) is PNG’s largest agriculture program. Launched in 2010, the project has improved the livelihoods of more than 67,000 smallholder cocoa and coffee producers across PNG, with more than three million cocoa trees and more than seven million coffee trees replanted or rehabilitated as part of the project. The project also includes a strong focus on increasing support to women farmers. In the capital, Port Moresby, the Urban Youth Employment Project has provided thousands of young Papua New Guineans with life skills and short-term employment opportunities.
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In doing so, it created 18,000 new bank accounts and over 815,000 days of work, with 85 of community members in project locations reporting that crime and violence had reduced. Poor road conditions mean that for many people in PNG, travel by road can be impossible, unsafe or simply far too expensive. Without reliable access to roads, people cannot reach schools, hospitals or markets when they need to. Now in its second phase, the World Bank’s Road Maintenance and Rehabilitation Project has already restored more than 160 kilometers of roads across PNG.Explore open data about World Bank's financing in Papua New Guinea. Credit growth and improved access to foreign exchange have also increased private investment. In 2020, growth will slow down, due to lower energy prices. The non-extractive private sector will experience stronger growth, driven by the delayed effects of monetary easing in late 2019 and rising private demand. Growth will be based on agriculture, services and tourism, with manufacturing accounting for only 3 of GDP. However, the expansion could exceed forecasts if planned mining and gas projects get started ahead of schedule: the Papua LNG project with Total and Exxon in particular has received government approval after the contract was renegotiated in order to increase profits for the country. The project will be the largest in ten years and represents USD 10 billion of foreign investment (42.7 of GDP). The final stages of approval are in progress. Inflation has slowed thanks to moderate credit growth, lower imported inflation, as the currency has remained stable, and supplier prices have fallen. Taking advantage of the room for manoeuvre opened up by low inflation, the central bank reduced the deposit facility rate in July (25 bps) and again in September (50 bps) to 5.5. Inflation will remain moderate in 2020: prices from foreign suppliers are expected to remain stable and the economy has spare capacity.
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Rising public debt, current account surplus holding steady The public deficit widened in 2019 as tax credits and breaks granted under project development agreements offset the automatic increase in revenues due to strong growth. Expenditure was planned with overly optimistic expectations of gas revenues, leading to the use of credit and an increase in debt, which has tripled in 7 years. The country will therefore have to pursue a more severe austerity policy than expected in order to stabilize the deficit. Investment, education, health and administrative expenditure will be most affected. Combined with the revenue catch-up in 2020, these measures will enable a small reduction in the public deficit. The debt is held by domestic banks, which are now exposed to sovereign risk. The country is trying to increase the share of its external financing, to reduce the exposure of domestic participants, on the one hand, but also to attract foreign exchange. The issuance this year of USD 500 million in 10-year government bonds has reduced the time required for traders to access foreign exchange. China holds a quarter of the external debt, but leaders are looking for other partners in debt refinancing: an Australian loan of USD 440 million replaced a Chinese loan to refinance the debt at the end of November. The country can count on the support of the AfDB and especially Australia, a traditional partner and leading donor, whose grants accounted for 40 of external financing in 2019. Papua New Guinea’s current account continued to show a large surplus in 2019, thanks to gas, which accounts for 40 of exports. It is set to improve in 2020: while energy prices may drive down the value of exports, protectionist measures and the postponement of major mining projects will depress imports. Foreign exchange reserves amounted to USD 1.92 billion as at September 26, 2019, or 5.3 months of imports, an acceptable level.
The government is fuelling social unrest Faced with corruption scandals, growing public discontent and a wave of government resignations, Prime Minister Peter O’Neill was forced to step down in May 2019. His finance minister, James Marape, was elected Prime Minister by the opposition Pangu Pati Party on May 30, 2019. His austerity policy must to take into account the difficult social situation, which triggered riots earlier in 2018. The referendum on the independence of Bougainville Island was held on November 23 in accordance with guarantees made by the Papuan State at the end of the war of independence in March 2000. Voters were offered two alternatives: more autonomy within Papua or complete independence. It is strongly anticipated that they will opt for independence. However, the result of the referendum is not binding, and the national government is expected to refuse to grant independence to the copper-rich island, which would heighten regional tensions. The business climate has deteriorated: Papua has dropped 12 places in one year in the World Bank’s Doing Business 2020 ranking, and now ranks 120th. Governance indicators also place Papua at the bottom of the Pacific region on corruption, the rule of law and government effectiveness. However, the government has taken steps to improve the business environment and diversify the economy. In particular, an SME credit insurer has been created, a new tax regime for SMEs is planned, and reforms of state-owned enterprises are underway. An anti-corruption commission has been established, and laws defending the rights of whistle-blowers are to come. Last update: February 2020. Most people living in PNG are Melanesian, but some are Micronesian or Polynesian. PNG has over 800 known languages. English, Tok Pisin (Pidgin), and Hiri Motu (the lingua franca of the Papuan region) are the official languages.
Some 80-85 per cent of the population directly derive their livelihood from farming, and 15-20 per cent of the population live in urban areas. Population growth is estimated to have been 2.1 per cent in 2015, the most recent year for which data is available. The Act provided for a Legislative Council (established in 1951), a judicial organisation, a public service, and a system of local government. The first House of Assembly, which replaced the Legislative Council in 1963, opened on 8 June 1964. In 1972, the name of the territory was changed to Papua New Guinea and elections saw the formation of a ministry headed by Chief Minister Michael Somare, who pledged to lead the country to self-government and then to independence. Independence from Australia was proclaimed in 1975, and Somare became the first Prime Minister of Papua New Guinea. The Head of State is HM Queen Elizabeth II, represented in Papua New Guinea by a Governor-General, currently His Excellency Sir Robert Dadae. The Governor-General is elected directly by Members of the National Parliament and performs mainly ceremonial functions. The National Parliament is a 111 member unicameral legislature elected for five-year terms by universal suffrage. The Prime Minister is appointed and dismissed by the Governor-General on the proposal of Parliament. The Supreme Court, National Court, and local and village courts form an independent justice system. The regional electorates correspond to Papua New Guinea's 20 provinces, plus the Autonomous Region of Bougainville and the National Capital District. Members from regional electorates also serve as provincial Governors. Each province has its own provincial assembly and administration. After the 2002 election a system of limited preferential voting was introduced, under which voters are required to list a first, second, and third preference. Historically, there has been a high turn-over of parliamentarians at general elections.
In 2002, for example, around 80 per cent of sitting members lost their seats. In the 2012 elections, the figure was almost 60 per cent, with 45 incumbents re-elected. Once the 18-month moratorium expires, a successful no-confidence motion may result in a new Prime Minister forming a government without the need for a national election. If the no-confidence motion occurs during the last twelve months of a five-year term, a national election must be held. Changes in government following motions of no-confidence have been a characteristic of PNG politics since independence. Government relations are underpinned by the Comprehensive Strategic and Economic Partnership of 2020 and the Joint Declaration for a New Papua New Guinea-Australia Partnership, which is built on the Joint Declaration of Principles of 1987 (revised in 1992). Our leaders and ministers are in close and regular contact, including through an Annual Leaders' Dialogue and the Ministerial Forum. Papua New Guinea hosted the 27th Ministerial Forum on 26 August 2019 in Port Moresby. Ministers agreed to cooperate in areas that will maximise bilateral and regional stability and prosperity, including through progressing the Comprehensive Strategic and Economic Partnership, enhanced trade and investment arrangements, development cooperation, critical infrastructure, defence, policing and border management. Australia provided support for PNG's hosting of APEC in 2018, particularly assisting with security arrangements. This involved support from both the Australian Defence Force and the Australian Federal Police. The Papua New Guinea Defence Force made a valuable contribution to peace in the region through its decade long involvement in bringing peace and stability back to Solomon Islands. This economic performance was driven by high international prices for PNG's exports (including for agriculture), conservative fiscal policies and construction activity related to the PNG LNG project.
Economic growth peaked in 2014 with the commencement of exports from the LNG Project. Major planned resource projects are expected to restore economic growth in the medium term. With around 80 to 85 per cent of Papua New Guineans residing in traditional rural communities, the majority secure their livelihoods from subsistence gardens and small-scale cash cropping. Major imports to Australia from PNG are gold, crude petroleum, silver and platinum. The resource sector has traditionally been a focus of this investment, particularly gold mining and oil and gas. Australian investment has also been directed towards light manufacturing, infrastructure and service delivery. The annual Australia-Papua New Guinea Ministerial Forum includes a Business Dialogue with private sector representatives. The Bilateral Business and Officials Working Group brings together senior officials from both governments and senior representatives from the business sector to discuss issues raised by the business community. The Australian High Commission in Papua New Guinea also facilitates the Australia-PNG Business and Development Roundtable, which brings together leaders in the business community with senior Australian Government officials. Business representation at these meetings has included, but is not restricted to, the Business Council of Papua New Guinea and the Australia-Papua New Guinea Business Council. For more information, visit our page on the Direct Aid Program. ACIAR's work supports the PNG Government's Medium Term Development Plan to promote economic growth in the rural sector (comprising agriculture, forestry and fisheries). PNG faces many challenges to agricultural development, including poorly developed infrastructure, weak market signals and services, new pest and disease threats, poor product quality, and pressure on land and renewable resources as a result of population increases and mining development.
ACIAR's research in PNG aims to help secure improvements in food supply, food access and rural incomes for smallholders through increased productivity and enhanced access to markets and services. For more information visit the ACIAR website. Under the New Colombo Plan in 2017, Australian students will study or undertake work-based experiences in PNG in sectors including agriculture, anthropology, and business. By giving students the opportunity to study in PNG, the New Colombo Plan helps to lift knowledge of PNG in Australia and provides a basis for ongoing engagement in business and tertiary education. The Network is run by the Lowy Institute for International Policy, in partnership with the National Research Institute of Papua New Guinea. Applications are open to both public sector employees and individuals employed in the private sector or endorsed by other institutions, such as non-government organisations. Individuals must be able to demonstrate how their studies will help contribute to the development needs of the country. See the AVID website for further information. Students learn about the diversity of the world’s people, including the indigenous peoples of other countries. Students will explore and reflect upon similarities, differences and the importance of intercultural understanding. The tropical jungles are high in biodiversity and of world significance. Large numbers of birds, mammals, reptiles, fish, amphibians and invertebrates thrive. It is thought by scientists that many species are yet to be discovered due to the difficulties of reaching isolated and remotes areas. The Voyage of the Rattlesnake, the paintings by John Gould and Ellis Silas present the islands’ natural features as well as the traditional lives of the people with underlying feelings of awe, wonder and respect. The images from the State Library catalogues showcase the beauty and traditional ways of life of the people of Papua New Guinea.
The Gapminder website has futher details of Papua New Guinea's human development indicators. As Australia’s closest neighbour it is in our best interests to help Papua New Guinea develop and prosper into the future. Our two nations are connected through foreign investment and trade, aid and are working towards agreement on environmental and sustainability issues. By exploring our connections and understanding how this influences our perceptions and understanding of a place, we promote positive values and develop global citizenship in students. Public Library Services For suggested attribution, see our copyright page. Now is the time to harness this power for inclusive growth so that communities, especially in poor and remote areas, can survive the crisis and thrive. A new video series is exploring ADB's contributions to development of the country's energy, health, and transport sectors, as well as its drive for financial inclusion and private sector-led development. The government works with its development partners, like ADB, to make health care more accessible. Updated four times a year, it analyzes economic and development issues in developing countries in Asia and the Pacific. Additional funds are provided in the form of official loans and grants, technical assistance, other concessional financing, and commercial cofinancing such as B loans, risk transfer arrangements, parallel loans and equity, guarantee cofinancing, and cofinancing for transactions under ADB’s Trade Finance Program. It assists its members and partners by providing loans, technical assistance, grants, and equity investments to promote social and economic development. As the most populous Pacific Island state (7.8 million: 2013 estimate), Papua New Guinea is important to peace and security in the Asia-Pacific region. The country has experienced recent economic progress and has abundant energy, agricultural, and mineral resources.In 2017, the U.S.
provided funding for relief efforts in the Highlands which suffered from a magnitude 7.5 earthquake. U.S. military forces, through Indo-Pacific Command in Honolulu, Hawaii, provide training to the Papua New Guinea Defense Force and have held small-scale joint training and engineering exercises. The U.S. provides police and other education and training courses to national security officials. U.S. companies based in Papua New Guinea have also funded a range of health and development projects. The ExxonMobil-led liquefied natural gas project, PNG LNG, has been a success for Papua New Guinea, hailed for its timely and close-to-budget construction and smooth operation. Explore our core themes and topics to learn more about our work. Our events convene the top thinkers and doers in global development. Papua New Guinea (PNG) is larger, richer, and growing faster than I had thought. It will go to the polls this very month to elect a new government. It is also facing all the dilemmas faced by most low-income countries since the 1950s—political fragmentation, resource curses, income inequality, and poor health. Have we learned anything to help it meet those challenges? The political choices being made in PNG bring this into relief. The current government’s policies can be characterized as blatantly disregarding norms of good governance or as pragmatic initiatives to construct a national and civil polity. Which of these characterizations is more accurate will only be revealed by the social and environmental consequences. Arbitrarily centering the map on the Atlantic Ocean also puts Papua New Guinea on the far-right fringe. It is actually larger than Sweden, Iraq, or Germany. With a population of about 8 million, it is comparable to Israel, Switzerland, and Bulgaria, and it will grow to 10 million by 2030. PNG’s central location is partly driving a construction boom in Port Moresby as the country prepares to host the Asia-Pacific Economic Cooperation ( APEC ) meetings in 2018.
In addition, PNG benefits from a long coastline (we know that being landlocked is a hindrance to development ). It shares a land border with Indonesia, one of Asia’s largest economies and its 260 million people. It is also close to a place with higher wages (more on that below). These proposals eventually led to billion-dollar programs like the Amazon Fund. If global targets of slowing climate change by 2030 are going to be met, it will require sharp reductions in tropical deforestation because deforestation releases large greenhouse gas emissions; because destroying mature forests reduces carbon sequestration; and because policies for preserving tropical forests are among the most cost-effective ways to address global warming (see CGD’s Why Forests? Why Now? ). Its population is dispersed—85 percent of people live in rural areas. Domestic integration is difficult because of mountainous terrain and a combination of geology and climate that makes road maintenance costly.A massive investment by ExxonMobil into extracting natural gas (LNG) contributed to the investment boom, but that project only started producing in 2014—just as global fuel prices began to decline. Economic growth is expected to resume at a modest pace on the base of extracting natural resources and agriculture, however, few expect the economic benefits from these sectors to be widely shared. Some argue that PNG will face a “natural resource curse,” including evidence that resource exports are driving up exchange rates and reducing the profitability of local industry. Others have documented the way promises of jobs and income for local communities can devolve into militarization and exacerbate inter-ethnic conflict. Current policies are keeping the currency overvalued and dependence on imported consumer goods may be one of the motivations that the country (elites?) won’t let the foreign exchange rate adjust more rapidly. PNG is on one side of an economic cliff relative to Australia.
The Torres Strait islands that are part of Australia lie only 4 km from PNG. I was told you can travel between PNG and Australia’s mainland “in a tinny in half a day.” While that proximity has implications for controlling illicit trade and the spread of infectious disease, it also presents an incredible opportunity for raising incomes in both countries by encouraging properly regulated temporary migration.Life expectancy is only about 60 years on average. Health has improved over the last two decades, but the pace has been too slow for PNG to meet any of the Millennium Development Goals. Infant mortality and maternal mortality remain high at about 47 per 1,000 live births and 215 per 100,000 births, respectively.Several Papuans told me they remembered community workers who maintained demographic and health records and conducted outreach visits when they were young, but reported that these functions are rarely performed today. A few years ago, a study described 2002 to 2012 as a “ lost decade ” because, by many measures, the provision of primary health care stagnated or declined during that period. That study documented declines in drug availability, consultations and availability of doctors at front-line facilities, and attributed these changes to poor management and less public funding reaching facilities. PNG has been independent for only 40 years and has undertaken two major waves of decentralization as part of the process of building a national political order and a viable governing coalition. While its critics call the money “slush funds” and deride it as institutionalizing corruption, O’Neill and its defenders argue it is more effective than national policies and strategies for reaching the local level. Spending these funds seems to be hindered by the same difficulties in financial and human resource management that have characterized national and provincial service systems and political favoritism.
Ironically, the devolution of spending could also serve to strengthen central authority by investing more power in national parliamentarians. PNG is certainly not unique in this regard. It’s a trait shared by most countries. Nevertheless, PNG is facing a significant transition in the next decade as foreign investment and increased international engagement bring resource benefits along with resource curses. The benefits of prudent fiscal and monetary policies, rule of law, tough negotiations for revenues from extractive industries, labor mobility agreements, and promoting intensification of agriculture rather than destroying forests sound good, but all rely on constructing a political coalition aimed to serve collective national prosperity and not necessarily particular interests. The benefits that come from investments in education, health, and infrastructure are similarly widespread without necessarily helping incumbents win re-election. Creating and implementing an effective national bureaucracy to serve the people is a daunting challenge. This country deserves the best that the international system can offer from researchers, policy practitioners, and funders to help meet these challenges and get the most out of its opportunities. The “how” embedded in politics is the one thing countries like PNG need to figure out for themselves. The rest of the world cannot answer that conundrum but we should help with the rest. The original post included incorrect estimates of wages and mistakenly reported a place premium of 38 to 1. CGD is a nonpartisan, independent organization and does not take institutional positions. Patrick Saez et al. A Four-Country Rapid Survey. Maryam Akmal et al. Azusa Sato. For the island in general, see New Guinea. For the western Indonesian half of the island, see Western New Guinea. For other uses, see Guinea (disambiguation). The western half of New Guinea forms the Indonesian provinces of Papua and West Papua.