Papua New Guinea

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. Despite a significant shock to its export prices, the economy slowed only modestly in 2009, to expand by 5.5 percent, before recovering to around 7 percent growth in 2010 and an expected 9 percent expansion in 2011 (based on information available mid-year). 

The turn-around from the economic crises of the late 1990s has been broadly based. While the USD 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 has been working with Papua New Guinea since 1975, and is now  near the end of its joint IFC-IDA Country Assistance Strategy covering the four year period of 2008-2012. The World Bank is committed to an active and long-term partnership with Papua New Guinea, aligning its strategy with the Government’s medium- and long-term strategic development frameworks. The new WBG Country Partnership Strategy will be developed in collaboration with government and stakeholders in the first six months of 2012.

The Government has recently engaged in three nested processes whose results together provide the strategic context and framework for development assistance going forward:  the National Vision 2050, which articulates the aspiration of diversifying away from minerals wealth towards broader growth and employment and improved service delivery; the Development Strategic Plan 2010-2030, which provides more specific guidance on key national priorities; and National Development Strategy 2011-15, which outlines immediate activities and priorities. 

Key objectives of the Bank’s cooperation include:

• Promoting sound macroeconomic and public expenditure management.
• Promote well-governed, sustainable extractive industries offering significant benefits at local as well as national levels.
• Promote the ability of the private sector to provide significant employment and livelihood opportunities
• Improve livelihoods through policies and investments that promote inclusive, sustainable growth in key agricultural subsectors.
• Support the development of more responsive, accountable local governments that deliver cost-effective public services for community needs.
• Help develop well-managed national and local transport services.
• Expand access to reliable, affordable electricity to support service delivery and rural enterprise development.
• Facilitate provision of reliable, affordable access to telecommunications.
• Contribute to harmonized approaches to improve education and health outcomes.

Under the Road Maintenance and Rehabilitation Project, support to rehabilitation of national and provincial roads and bridges in eight provinces has improved access to markets and suppliers. Households experienced better access to education and health facilities, and lower transport costs.

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.

A PNG version of the World Bank Development Marketplace was rolled out in 2006 and 2008, called the Tingim Yut Kompetisen, which focused on young people and their communities.  In 2006, 18 winners were chosen from 820 proposals; in 2008, 22 winning projects were selected out of more than 1500 proposals.  

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.