Even in the face of an uncertain global macroeconomic environment, Moody’s Rating Agency affirmed Papua New Guinea’s credit rating.
The Prime Minister, Hon. Peter O’Neill CMG MP, said the decision will see Papua New Guinea’s sovereign credit rating kept at B2/Stable with prospects for a likely increase as the economy strengthens and global economic threats pass.
He said the maintenance of a stable credit rating is another example of the success of the Government’s economic strategy, and exposes the lies and misinformation peddled by doom and gloom merchants in the Opposition.
“The Government has worked tirelessly, since the ratings downgrade two years ago in April 2015, to address the challenges the country faces, and we have maintained economic stability,” Prime Minister O’Neill said.
“Papua New Guinea’s medium-term prospects remain strong with annual growth projected at around 3 per cent.
“Moody’s credit ratings decision also points to bottoming out of the external shocks faced by the economy in 2015 and into 2016.
“Those in opposition should sit up and take note of the report, and stop trying to talk the economy down and destroy jobs.
“Ultimately, Moody’s assessment illustrates that our economy is on the right track.
“The tough decisions and reforms undertaken by the Government were necessary due to the adverse global commodity price shock and the drought conditions brought on by the El Niño weather phenomenon.
“Our approach and ongoing efforts to enhance nation prosperity are further guided by the Medium Term Fiscal Strategy 2018-2021 which is currently being finalised.
“The Government is already working with International Monetary Fund, World Bank and Asian Development Bank to address some of the underlying macroeconomic challenges as identified by Moody’s.”
The Prime Minister noted that the rating agency’s report, in line with the 2016 IMF’s Article IV report, highlights that the Government has undertaken several critical steps to deal with the revenue shortfall due to low global commodity prices, coupled with lingering effects of 2015 El Niño weather conditions.
“Through the 2015 and 2016 Supplementary Budgets, the Government undertook fiscal consolidation by reducing unproductive expenditure and implementing revenue-raising measures.
“The IMF 2016 Article IV commended the Government for undertaking a prudent and measured approach to fiscal policy given this external adverse shock.”
PM O’Neill said the extractive sector remains attractive and a key driver of the economy with several significant projects expected into operation in the short run.
“These include the PNG LNG expansion, Papua LNG and the Wafi-Golpu gold mining projects, which are moving ahead despite the current commodity price environment.
“In addition, agriculture production is expected to drive the economy in the medium term through the Government’s efforts to increase productivity.
“This is supported by significant infrastructure projects aimed at improving access to markets.
“This will have positive spill-overs for the rest of the non-resource economy, where most Papua New Guineans live and work.”
The Prime Minister concluded by highlighting the need for further progress on revenue and public finance management reforms.
“As we see improvements in our economic position, now is not the time to relax, and we must continue with reforms.
“In the next Parliament, we will consolidate reforms to restore a more sustainable fiscal position by addressing some of the pressing issues around revenue generation, public expenditure and debt sustainability.
“In terms of public expenditure, despite lower than expected revenue, we need to preserve productive and essential expenditures aimed at protecting jobs and advance development enablers sectors such as healthcare, education, critical infrastructure delivery and law and order.”