Papua New Guinea (PNG) is currently navigating a challenging economic landscape characterized by foreign exchange shortages that have stymied growth and foreign direct investment (FDI) for nearly a decade. According to Sohrab Rafiq from the International Monetary Fund (IMF), PNG's average growth rate has significantly declined since 2014, primarily due to an overvalued kina. Rafiq noted that without these persistent issues, PNG's economy could potentially be billions of US dollars larger.
Amid these challenges, domestic investors are stepping in to fill the investment gap. Notable projects include Kumul Petroleum's new facility and PNG Ports' industrial park, alongside expansions by major companies such as Coca-Cola and Nestlé. These initiatives highlight a growing reliance on local investment to stimulate economic activity while the country awaits the next wave of foreign investment.
The Papua LNG project, valued at approximately US$10 billion, is currently facing delays, with a final investment decision now expected in late 2025 or early 2026. This project is crucial for PNG's economic future, but its postponement underscores the broader challenges the nation faces in attracting foreign capital.
Despite the economic hurdles, major international donors, including the IMF and the Asian Development Bank (ADB), continue to support PNG's economy, providing necessary backing as the country works to stabilize its financial situation and improve its investment climate. The ongoing domestic investments, coupled with international support, may pave the way for a more resilient economic future for Papua New Guinea.