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Papua New Guinea Overview

Papua New Guinea (PNG) is rich in gold, oil, gas, copper, silver, timber and is home to abundant fisheries. Its population of less than 7 million is strikingly diverse, organized in small, fragmented social groups and speaking over 800 distinct languages. The economy is highly dualistic, consisting of an enclave based formal sector that focuses mainly on large-scale export of natural resources, and an informal sector dominated by the subsistence and semi-subsistence activities of the majority rural population, although a local non-mineral small and medium enterprise sector is now emerging.

Stronger macroeconomic management in recent years has turned a series of positive external income shocks and large new investments into the longest uninterrupted period of economic growth since the country’s independence in 1975. PNG’s economy continued to expand strongly through the first half of 2012, albeit less quickly than in 2010 and 2011. Over 2012, the economy grew by around 8 percent, compared with near 9 percent growth in 2011.

The turn-around from the economic crises of the late 1990s has been broadly based. While the $15 billion PNG-LNG investment has been the most notable, other investments in communications, construction and real estate, for example, have given significant impetus and created spillovers into other sectors. These investments have supported growth in formal employment, creating shortages of skilled labor. 

There has been important progress in key areas of structural reform in recent years; in particular, opening markets in telecommunications and air transport has produced major welfare gains for the population.  To diversify the economy and increase employment, attention is needed to challenges such as maintaining law and order, improving the business climate, commercializing state-owned enterprises, reducing the regulatory and licensing burden, and equitably accessing resources (including land) for development.  Developing infrastructure – electricity, telecommunications, road and other transport – continues to be a critical precondition for accelerated private sector-led growth.

Translating strong macroeconomic performance and extractive industry revenues into a broad improvement in living standards remains the key challenge for PNG. Ensuring the integrity of the public financial management for service provision, improving efficiency of sectoral spending, raising the performance of the civil service, and improving transparency and accountability in budget management will be crucial in converting the forthcoming windfall revenue into palpable improvement in service delivery.

The World Bank Group has dramatically scaled up its engagement in PNG, and is committed to continuing this support as part of a renewed longer-term commitment. In November 2012, the Bank approved the Country Partnership Strategy (CPS) for Papua New Guinea. This strategy will guide the Bank’s engagement in the country for the period of 2013 to 2016.

The CPS has identified prioritizing gender equality as “smart economics”, and gender issues will be “front and center” throughout the new CPS which focuses on three main pillars.

Increased and more gender-equitable access to inclusive physical and financial infrastructure. The first pillar of WBG’s partnership in PNG will focus on providing increased access to inclusive physical and financial infrastructure in ways that benefit women and girls as well as men and boys by providing support to:
• improve key national and provincial roads
• increase coverage of rural areas by mobile networks and/or broadband
• increase access to credit for SMEs, increase the number of women with bank accounts, and increase access financial institutions in rural areas
• update policies to facilitate investments that contribute to an increased access to electricity.

Gender-equitable improvements in lives and livelihoods. The second pillar will contribute to improvements in the quality of life and livelihoods of women and girls as well as men and boys through interventions to support:
• expanding yields of smallholders growing cash crops, improved sustainability and resilience to price and weather volatility, and improved market chain infrastructure
• providing youths in urban areas with ‘second chance education’ programs to complete secondary school, access to training and job opportunities, and targeted monitoring of and support for female participation in the wage labor market
• public-private mechanisms that facilitate business and investment while removing impediments and inefficiencies in regulation and reducing business costs.

Increasingly prudent management of revenues and benefits. The third pillar will sustain support to the prudent management of revenues and benefit streams by providing support in:
• minerals revenue management and extractives industries transparency, deepen engagement on quality of public expenditures and public finance management, and leverage pilots in gender-equitable community development and benefits management
• improving sustainability through attention to environmental and social performance standards by extractives companies.

The Road Maintenance and Rehabilitation Project has supported rehabilitation of national and provincial roads and bridges in eight provinces has improved access to markets and suppliers. The project has helped maintain and restore over 1,300 km of the country’s national roads, and rehabilitate or replace 49 bridges. Households experienced better access to education and health facilities, and lower transport costs.

The World Bank has helped facilitate improved mobile phones access and a stronger policy and regulatory framework for ICT. This has brought a healthy competition among mobile phone operators. The country now has three operators, resulting in a ten-fold increase of mobile phone users to 1,800,000 subscribers and price for calls have dropped by 60 percent.

Under the Mining Technical Assistance 2 Project, the bank is supporting the Mineral Resources Authority, The Department for Mineral Policy and Geo-Hazard management, Internal Revenue Commission and the  Autonomous Bougainville Government’s department of mining to improve the legal regulatory mining sector frame work and strengthen the institutional capacities of these entities to manage the mining sector in a sustainable manner. 

The Health Human Resource Survey was completed in 2011. The study was commissioned by the PNG National Department of Health and looked at projections in the supply of the health workforce in PNG and ways to address gaps in the coming years. 

The Self Reliance Program for Women in Mining and Petroleum Communities conducted training and outreach to 14 sites across PNG, looking at governance and institutional capacity building, and income generation and training skills development, for stakeholders. The project was implemented by the PNG Chamber of Mines and Petroleum, with the support of gender desk of mining companies and NGOs, churches, and other civil society organizations and focused mainly on local women’s associations.

Following the devastating volcanic eruption in 1994, support was given to the East New Britain Provincial Administration over a 10 year period from 1998 to 2008 which assisted in land mobilization, provision of infrastructure and utility services, consolidation of Kokopo as the provincial capital, and Rabaul’s restoration as a regional port. New schools and health clinics have been built and people successfully resettled.



LENDING

Papua New Guinea: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments

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Find out what the Bank Group's branches are doing in Papua New Guinea.