For the time being, PNG’s economy appears to be managing its way through the COVID-19 crisis. According the Treasurer Ian Ling-Stuckey in the Final Budget Outcome for 2020, released in the past week, the ‘economic impact of the health crisis remained within our initial estimates.’

Treasurer Ian Ling-Stuckey.

‘Our fiscal deficit this year has increased to K7,304.4 million, estimated to be 8.9 per cent of GDP. This is an inevitable outcome given the circumstance to avoid catastrophic health and economic damage …

‘The main reason the government has been able to manage its financing of the deficit is the invaluable support of our international partners …

‘This was complemented by domestic financing, backed with a liquidity operation of the Central Bank …

‘In the end, we managed to finance all of our intended expenditure plans without taking a single commercial loan.’

— Ian Ling-Stuckey, PNG’s Treasurer, in the Final Budget Outcome 2020

The government’s expected revenue shortfall was actually a little better than budgeted and government spending was higher than 2019, supported by external concessional funding.

There’s still a sizeable budget deficit to contend with (see above), and government debt equivalent to 49.2 per cent of GDP, but the planned spending on priority areas such as health, education, law and order, and capital works occurred, ensuring that these parts of the economy kept ticking over.

Our next online business briefing, next Thursday 22 July, will include a closer look at the government’s finances and the implications for business, with help from the Asian Development Bank’s Abhimanyu Dadu, who has been working inside Treasury.

With the Treasurer now on speaking terms with Amazon and a Digital Government Bill due in Parliament next month, we’ll also be joined by the Department of Information and Communication’s Technology’s Steven Matainaho, the man who owns the plan for e-government in PNG.

Resources on the move

Meanwhile, negotiations over the ExxonMobil-led P’nyang gas project are restarting, and Prime Minister Marape is also expecting the Total-led Papua LNG project to go into pre-FEED in September.

Alongside this, there has been progress on smaller resources projects. The gas agreement for the Twinza Oil’s US$2.4 billion Pasca A project is set for signature on 29 July, while a fully-funded Geopacific Resources is expecting first gold on its Woodlark island project in 18 months’ time. And, of course, a reopening of Porgera gold mine is also on the cards.

It’s not where we thought we’d be, but things are moving in the right direction.

With the International Energy Agency’s recent Net Zero by 2050 report anticipating ‘huge declines in the use of coal, oil and gas,’ there is a renewed sense of urgency surrounding all slated gas projects globally.

Green shoots

Respected economist Saul Eslake

Identifying the green shoots in PNG’s economy and the longer term opportunities for investors has been uppermost in my mind, as I’m on the Organising Committee for the 2021 Papua New Guinea Investment Conference, which is taking place from 7 to 9 September.

We’ve identified three themes which will inform this year’s event, which is being live-streamed globally:

1. Where will PNG fit in the post-COVID global economy and what trends can it lean into?
2. While resources sector investments will turbo-charge PNG’s economy over the next decade and more, what are the opportunities (and risks) associated with the low carbon economy of the future?
3. Now that PNG’s economy is starting to digitise, where can technology and innovation take us?

With over thirty speakers scheduled, including respected ex-ANZ economist Saul Eslake and Queensland’s Chief Entrepreneur Wayne Gerard, I’m expecting a very stimulating event.

Registrations are now open and you can find out more about it here.