The Papua New Guinea economy

Papua New Guinea's modest recovery continues. GDP grew again in 2004 by 2.6 per cent. As in 2003, good weather and buoyant commodity prices played an important role: but last year showed signs of a broader base to growth, as the government's efforts on the deficit and debt management improved the overall business environment. The budget was in surplus, inflation fell, key interest rates eased and public debt fell relative to GDP. There is little room to relax on the public finance reforms that are re-establishing control over waste and unplanned spending and helping to achieve good fiscal outcomes. But attention also needs to be focused on strengthening strategic and policy influence on spending plans, if public sector service delivery is to improve and progress made on the Government's medium-term development objectives.