DP66 2017 PNG economic survey

Development Policy Centre Discussion Paper No. 66

By Rohan Fox, Stephen Howes, Nelson Atip Nema and Marcel Schröder

December 2017

This 2017 PNG Economic Survey is written at the start of Prime Minister O’Neill’s second full term, following the June/July 2017 national elections. How can the new government respond both to the current economic difficulties and to longer-term growth and revenue challenges? This Survey examines PNG’s recent growth performance and fiscal and macroeconomic settings. It argues that economic policy in recent years has been broadly pro-cyclical. A high level of government borrowing during the boom years has made it more difficult to borrow when it is needed: now, after the boom. A flexible exchange regime during the boom led to appreciation of the Kina, but now a fixed exchange rate is preventing the economy from adjusting, and deepening the down-swing. Economic and fiscal recovery will require different policy settings. The new “100 Day Plan” has some important fiscal reform commitments, but no reform program will be successful without re-introducing flexibility into PNG’s exchange rate regime.

Fox, R., Howes, S., Atip Nema, N. & Schröder, M. 2017, ‘PNG economic survey’, Discussion Paper No. 66, Development Policy Centre, Crawford School of Public Policy, Australian National University, Canberra.

Rohan Fox

Rohan Fox was a Research Officer at the Development Policy Centre. He lectured in the economics program at the University of Papua New Guinea in 2015, 2016 and 2020.

Stephen Howes

Stephen Howes is Director of the Development Policy Centre and Professor of Economics at the Crawford School of Public Policy at The Australian National University.

Nelson Atip Nema

Nelson Atip Nema is a Lecturer in Economics at the University of Papua New Guinea.

Marcel Schröder

Dr Marcel Schröder is a Visiting Fellow at the Development Policy Centre, and in 2015-16 was a Lecturer in Economics at the University of Papua New Guinea as part of the ANU-UPNG partnership. He is currently an Assistant Professor at the Lebanese American University. His research focuses on macroeconomic aspects of economic development.