Papua New Guinea Economic Outlook Clouded by Social Unrest and Infrastructure Challenges
The Asian Development Bank (ADB) recently released its Asian Development Outlook for Papua New Guinea, shedding light on the nation's economic trajectory for 2024. While the report predicts a notable increase in revenue, concerns loom large due to ongoing social unrest and infrastructure inadequacies.
According to the ADB's findings, revenue, excluding development partner grants, is set to surge by K2.8 billion this year, reaching a total of K18 billion from taxes alone. This marks a significant rise from K16 billion recorded in the previous year, amounting to 2.6% of the gross domestic product (GDP). The bulk of this revenue is expected to be derived from taxes on profits, salaries, wages, and other non-tax sources.
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| Papua New Guinea Economic Outlook Clouded by Social Unrest and Infrastructure Challenges |
Despite the optimistic revenue forecast, expenditure is projected to grow at a slower pace, increasing by K1.86 billion, equivalent to 1.8% of GDP. Notably, capital budget allocation is expected to rise by 9.0%, operations budget by 8.0%, and the payroll bill by 1.3%.
However, these economic projections are marred by significant risks, including the aftermath of recent social unrest and potential government interventions to support affected businesses. Strikes by law enforcement officers have resulted in widespread looting and damage to retail establishments, impacting 53 businesses and causing estimated damages of about K1.2 billion (1.2% of GDP), along with over 2,000 job losses.
Moreover, infrastructure challenges such as power supply outages and water shortages have emerged as critical issues, particularly in Lae, Papua New Guinea's industrial hub. Manufacturing companies have been severely affected, leading to increased operational costs and reduced competitiveness.
Transportation disruptions have further exacerbated economic woes, with fuel shortages causing mobility issues across the country. Puma Energy Limited's inability to supply adequate jet fuel and general fuel has had cascading effects on businesses, the transportation sector, and the general public.
The revenue outlook offers a glimmer of hope, the prevailing challenges underscore the urgent need for comprehensive reforms and targeted interventions to safeguard Papua New Guinea's economic stability and foster sustainable growth.
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