Monday 24 October 2022

Prime Minister Hon. James Marape has given assurance that economy improvement is imminent when highlighting government’s economic status and priorities, at the 2022 PNG Update at the University of Papua New Guinea last Thursday (20 October 2022).

When   addressing participants at the ‘PNG Update’ forum at the University of Papua New Guinea, Mr Marape said the theme, ‘Pathways to Development Amid COVID-19 and Beyond PNG’s 10th Election’ was  contemporary and   timely.  

He adds, “According to the PNG Economic Database, PNG’s economy recorded a GDP of about K1.8 billion in 1975; K3.6 billion in 1985; K9.4 billion in 1995; K22.8 billion in 2005; and K60.1 billion in 2015.

“In December 2018, our economy was at K79.4 billion GDP and in 2019 we were at K83.8 billion and despite the COVID-19 induced economic contractions of 2020 and 2021, both World Bank and IMF estimate that our economy will go pass a K110 billion in 2022,” PM Marape said.

PM Marape admits the economy size may have increased from under K2 billion in 1975 to over K100 billion but translation to Gross National Product (GNP) for citizens in the country remain weak and disparities exist due to the following factors:

•         Majority of citizens, possibly over 85 per cent, remain in the subsistence economy;

•         Less then 15 per cent have been in some formal employment;

•         Population growth continues to outgrow economic growth;

•         Over 80 per cent of the country is unlinked to roads and highways, jetties and ports, airstrips and airports, communications and electricity – the backbone infrastructure of all nations;

•         Over 70 per cent of citizens are half educated or not educated at all;

•         No spread or presence of law and justice sector in most parts of our country;

•         Exposure to imported inflation and global economic downturns; and

•         Corruption and nepotism.

“From these challenges and backdrop, we have emerged 47 years on and we have come from a slow and weak starting point, but take heart we have progressed.”

Mr Marape said that the Government in the last three years has expanded the economy  by using Budget policies to ensure that economy is fueled for debt restructuring and reduction, economic stimulus and growth, as well as productive sustenance of the country in public services and service delivery.

“Commenting on the 2022 Budget, the National Research Institute recognised that the massive 2022 billion budget will contribute to stimulating the economy via spending and subsequent effect on increasing consumer demand, consistent with the Keynesian school of thought.

“ It recognises that consumer demand is vital for businesses to perform well, and create more income and employment in the economy,” Prime Minister added.

“The national GDP in 2019 was K83.8 billion with a growth rate of 4.5 per cent and the GDP projected for 2022 is K109 billion, a growth rate of 4 per cent.

BSP delivering a net profit of K1.075 billion in 2021 off the back of a strangled economy can only mean that high budgetary investments by the Government have found their way into the banking sector.”

PM Marape is satisfied the World Bank recognises growth in the agriculture sector, which has weathered the pandemic better than others.

He added the strong performance of the agriculture sector reflects additional Government financial support to small to medium enterprises during the pandemic, and the agriculture price support and freight subsidies will continue going forward.

“These are results that were achieved during the period of the pandemic and it is evident that PNG can work through challenges, the biggest of these challenges is the impact of the recession of global economies because it is imported into PNG.

“According to the Institute of International Finance, in 2021 global, debts reached a record $303 trillion compared to $226 trillion in 2020, the world has gone and asked for more money, we must therefore view our financing challenges in context,” PM Marape  stated.

Mr Marape further highlighted that his government would continue the reforms embarked upon in the 10th Parliament, adding, members of Parliament are obligated to serving citizens and the country

“Since my election as Prime Minister in 2019, I have held firm in my view that we have the potential to transform our nation to become a K200 billion economy. In Government’s estimation, a K200 billion economy will give us the economic space we need to finance our nation’s development.

“This requires that we evolve from a mindset of dependency on Government, wantoks and foreign aid to one of economic independence, where we harness economic opportunities available in our country and invest in growth.”

PM Marape added that the government’s election victory was a vote-of-confidence in the direction that they have taken the nation over the course of the past three years, and  have sought to stabilise an economy shaken by global uncertainty, and to bring about budget repair.