THE International Monetary Fund says Papua New Guinea’s economic outlook remains positive as structural reforms continue to bear fruit.
IMF Deputy Managing Director and Acting Chairman Bo Li (pictured) said in his statement that notwithstanding a weakening external environment, growth is expected to increase to 4.7 per cent in 2025, driven by strong growth in the resource sector and resilient growth in the non-resource sector in part thanks to improvements in access to foreign exchange.
It is also expected that the next Article IV consultation with PNG will be held in accordance with the executive board decision on consultation cycles for members with fund arrangements.
Mr Bo released this while announcing the completion of IMF’s Fourth Reviews of PNG’s ECF/EFF arrangements and the first review under the RSF arrangement.
He said headline inflation is expected to rise to 4.8 per cent from a very low base in 2024 and core inflation is expected to edge up to 4 per cent.
Over the medium-term, growth is expected to moderate and stabilise at just above 3 per cent, supported by the non-resource sector growth, with inflation remaining anchored at around 4.5 per cent.
The outlook is subject to significant downside risks, as PNG is vulnerable to both domestic and external shocks.
These risks are exacerbated by considerable capacity constraints and socio-political fragility that limit the government’s ability to design and implement policies aimed at economic stabilisation, development, and climate adaptation.
Commodity price volatility, as well as other global risks arising from geopolitical conflicts, geoeconomic fragmentation, trade barriers, and supply disruptions may create additional pressure on growth and inflation.
On the upside, the kickoff of major resource projects, which are not yet in the baseline scenario, could boost economic growth in the medium run, with significant gains in exports and fiscal revenues once they begin operations.
Mr Bo said the program performance has remained satisfactory, with the authorities displaying a sustained commitment to reforms.
All but one end-December 2024 quantitative performance criteria and indicative targets under the ECF-EFF arrangements were met, and six out of eight structural benchmarks due were fully or partially implemented. One reform measure under the RSF arrangement was implemented.