Written by Andrew Anton Mako on August 31, 2012
The growth performance of Papua New Guinea and the status of its public finances improved significantly in the last decade, underpinned largely by the boom in global commodity prices of key PNG exports, and good macroeconomic policies. The national budget, which was in deficit from the late 1990s, recorded its first surplus in 2004, public debt fell from more than 60% of GDP in 2003 to about 25% by 2011, the trade balance recorded large surpluses, and foreign reserves improved. The country also passed several record national budgets due to a tripling of revenue. And yet many suggest, with good reason, that it was a wasted decade. What lessons can PNG learn in terms of its experience with rapid revenue growth moving forward?