2017 PNG Economic Survey

35 Pages Posted: 12 Dec 2017  

Rohan Fox

University of Papua New Guinea - Division of Economics, School of Business and Public Policy

Stephen Howes

Australian National University (ANU) - Development Policy Centre; Australian National University (ANU) - Crawford School of Public Policy

Nelson Atip Nema

University of Papua New Guinea

Marcel Schröder

Lebanese American University

Date Written: December 5, 2017

Abstract

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.

Keywords: Papua New Guinea, exchange rates, economic development

JEL Classification: O1, E52

Suggested Citation

Fox, Rohan and Howes, Stephen and Atip Nema, Nelson and Schröder, Marcel, 2017 PNG Economic Survey (December 5, 2017). Development Policy Centre Discussion Paper No. 66. Available at SSRN: https://ssrn.com/abstract=3083256 or http://dx.doi.org/10.2139/ssrn.3083256

Rohan Fox

University of Papua New Guinea - Division of Economics, School of Business and Public Policy ( email )

P.O. Box 320, University Post Office
National Capital District
Papua
Guinea

Stephen Howes (Contact Author)

Australian National University (ANU) - Development Policy Centre ( email )

7 Liversidge Street (Bld 70)
Lennox Crossing
Canberra, 0200
Australia

Australian National University (ANU) - Crawford School of Public Policy

ANU College of Asia and the Pacific
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

Nelson Atip Nema

University of Papua New Guinea ( email )

P.O. Box 320, University Post Office
National Capital District
Papua
Guinea

Marcel Schröder

Lebanese American University ( email )

P.O.Box 36
Chouran-Beirut 1102 2801
Byblos
Lebanon

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