A rebound in the mining and resource industries helped drive stronger economic growth in Papua New Guinea in 2019, a year which saw Peter ONeills eight-year tenure as prime minister end.<\/p>\n
Mr ONeill resigned in late May following a series of policy disputes and defections within the government.<\/p>\n
He was replaced on May 30 by James Marape, the former minister of finance.<\/p>\n
In a break with his predecessor, Mr Marape has struck a somewhat nationalistic tone since taking office, setting out an agenda to find a more even balance between the interests of investors and Papua New Guineans amid a perception that the country has not adequately benefitted from foreign-funded, resource-based projects in the past.<\/p>\n
Elsewhere, the new administration has sought to diversify the economy by prioritising growth in non-resource sectors, small and medium-sized businesses, and the informal economy.<\/p>\n
A key pillar of this strategy involves agriculture, with Mr Marape telling OBG in a recent interview that he aims to turn the country into the food bowl for Asia by expanding production and export capabilities.<\/p>\n
To this end, the government announced it would invest K200 million ($58.7m) annually in the sector through to 2030, while in late August the EU inaugurated a K340 million ($99.8m) pilot program designed to benefit smallholder farms in East Sepik Province.<\/p>\n
Another sign of the new economic approach was revealed in late November with the release of the 2020 budget, the countrys largest ever.<\/p>\n
The budget outlined expenditure of K18.7 billion ($5.5bn), 13.3 per cent more than in the 2019 supplementary budget.<\/p>\n
Much of the spending will be directed towards capital investment, with a particular focus on electricity, internet and road infrastructure improvements seen as key to unlocking non-resource growth.<\/p>\n
While revenue is also expected to reach record levels, the budget foresees a deficit of K4.6 billion ($1.4bn) in 2020, or roughly 5 per cent of GDP.<\/p>\n
Resources drive return to growthWhile the economy struggled in 2018, it is projected to grow by 5 per cent in 2019, according to both Treasury estimates and the IMF, the highest rate since 2015.<\/p>\n
The sharp increase comes on the back of a 1.1 per cent contraction in GDP in 2018, with expansion heavily affected by the 7.5-magnitude earthquake that hit the country on February 26 of that year.<\/p>\n
In addition to leading to the death of more than 200 people, the earthquake destroyed much of PNGs industrial infrastructure, subsequently halting production of some of the countrys major resource-based projects.<\/p>\n
Growth in 2019 was largely driven by a recovery in mining and oil and gas operations as damaged infrastructure was repaired and production at major projects resumed.<\/p>\n
Non-resource industries have also recorded improvements.<\/p>\n
Non-mining growth is projected to increase by 2.9 per cent over the course of the year, according to Treasury figures, driven by 2.5 per cent growth in agriculture and fisheries.<\/p>\n
Project uncertaintyDespite efforts to diversify the economy, much of the countrys longer-term prosperity is still tied to resources.<\/p>\n
While these sectors recovered in 2019, they have also been subject to uncertainty.<\/p>\n
In a development that is expected to double PNGs liquefied natural gas (LNG) exports by 2024, the government signed an agreement with Total, ExxonMobil and Australian Securities Exchange-listed Oil Search relating to the development of the $13 billion Papua LNG project in April.<\/p>\n
However, shortly after taking power, Mr Marape called for a review of the terms of the deal.<\/p>\n
Despite announcing in September that it would honour the agreement, the governments approach has led to some concern within the industry.<\/p>\n
The Marape administration has also been locked in negotiations with ExxonMobil over the Pnyang gas project.<\/p>\n
With the government seeking more favourable terms than previous resources deals, there are fears that a stalemate over Pnyang could delay overall resource development in the country.<\/p>\n
Elsewhere, the government has moved to revise the 1992 Mining Act.<\/p>\n
Officials are expected to introduce the bill to Parliament in early 2020; anticipated proposals include reforms of the maximum term of mining leases, renewal periods for licences and labour laws.<\/p>\n
Bougainville votes for independenceAnother significant political event for 2019 occurred in December, when the people of the Autonomous Region of Bougainville, a collection of islands in the Solomon Sea, voted overwhelmingly to break away from PNG in an independence referendum.<\/p>\n
Almost 98 per cent of the 180,000-strong voting population voted in favour of independence, rejecting proposals of greater autonomy to remain part of PNG.<\/p>\n
Although a blow to PNG, the decision is non-binding, with the final decision to be ratified by Parliament.<\/p>\n
A series of lengthy negotiations are expected to determine the terms of the regions departure from PNG, with some analysts predicting that independence may not be realised for a decade.<\/p>\n
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PNGs economy rebounds in 2019, a year in review - POST-COURIER<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" A rebound in the mining and resource industries helped drive stronger economic growth in Papua New Guinea in 2019, a year which saw Peter ONeills eight-year tenure as prime minister end. Mr ONeill resigned in late May following a series of policy disputes and defections within the government. He was replaced on May 30 by James Marape, the former minister of finance. Continue reading