Papua New Guinea’s economic
growth will slow from 7.5%
in 2012 to 4.5% in 2013, according to forecasts in the latest edition of
the Pacific Economic Monitor, issued
yesterday (Tuesday) by the Asian Development Bank (ADB).
The ADB report says that slowing
economic growth will contribute to declining government revenues over the next
two to three years, placing significant fiscal pressure on the government.
Moderate levels of public debt, and trust fund
savings, should allow the government to maintain priority spending without upsetting
the fiscal stability that has underpinned the last decade of economic growth,
says the report.
“Ensuring this period of lower
government revenue does not disrupt service delivery will require the
government to continue its prioritisation of funding towards the key
development sectors of health, education, infrastructure and law and order,”
said Aaron Batten, country economist in ADB’s PNG resident mission.
The latest issue of the report,
ADB’s review of the 14 economies of the Pacific prepared three times a year,
notes that authorities will also need
to reign in growing public expectations about the country’s ability to finance
new projects with earnings from the PNG liquefied natural gas project, which
are not expected to be large until after 2023.
The Monitor shows that although PNG recorded its 10th consecutive year
of economic growth in 2011, the private sector remains small, with less than
10% of the working age population engaged in formal employment in private
enterprises.
Employment growth can be
encouraged by improving public infrastructure, reducing the perceived riskiness
in PNG’s investment environment and encouraging competition, the report says.
PNG joined ADB in 1971. It is
ADB's largest partner in the Pacific in terms of loans for public and private
sector development
ADB,
based in Manila, is dedicated to reducing poverty in Asia and the Pacific
through inclusive economic growth, environmentally sustainable growth and
regional integration.
Established
in 1966, it is owned by 67 members – 48 from the region.
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