ADB's Work in Papua New Guinea

Papua New Guinea (PNG) is a resource-dependent, lower middle-income country classified by the Asian Development Bank (ADB) as a fragile and conflict affected situation. The economy is dominated by the capital-intensive mineral and petroleum extractives sectors and the labor-intensive agricultural sector. In 2022, GDP grew by an estimated 3.2% as economic activity normalized across sectors following the impact of the coronavirus disease (COVID-19) pandemic.

ADB is one of the country’s largest sources of official development assistance, with an average annual lending of $339 million over 5 years from 2017 to 2022. ADB’s support is aligned with the Government of Papua New Guinea’s development plans, including the Medium-Term Development Plan 2018–2022 (see volumes I and II), Development Strategic Plan 2030, and Vision 2050.

To date, ADB has committed 268 public sector loans, grants, and technical assistance totaling $4.7 billion to PNG. Cumulative loan and grant disbursements to PNG amount to $3.44 billion. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds. ADB’s ongoing sovereign portfolio in Papua New Guinea includes 16 loans and 1 grant worth $1.53 billion.

ADB has provided comprehensive support to assist PNG in its recovery from the COVID-19 pandemic. In 2020, ADB provided a $250-million COVID-19 pandemic response option, which helped the government finance and implement its pandemic response plan. Additionally, a separate policy-based loan program disbursed a total of $500 million of budget support over 2020–2022 to reform and strengthen the operational performance and financial sustainability of state-owned enterprises. ADB technical assistance is also helping mitigate fiscal and debt risks.

ADB is financing large-scale infrastructure investments in transport and energy, including the ongoing $1-billion program for the rehabilitation and sustainable maintenance of 430 kilometers of highway in the highland areas. This program is also upgrading bridges, improving road safety, establishing logistics platforms and services for agricultural production, and supporting transport sector reforms. Support for strengthening technical and vocational education and training institutions in 2023 will equip the workforce with the skills to contribute to these and other areas of economic growth.

A grid development project to upgrade and extend the transmission and distribution grid in the national capital, Port Moresby, was approved in 2022. Also approved was the Civil Aviation Development Investment Project (Phase 2) which will support the upgrade of airports and a sample of four rural airstrips (pilot) throughout PNG. ADB has also supported reforms in the health sector; and through technical assistance, and continues to support efforts to bolster public financial management.

Banz town market along the old highland highway. Banz-Ogelbeng Road is part of ADB's Highlands Region Road Improvement Investment Program. The project aims to build and manage a sustainable road system in the five provinces of the remote Highlands region. Photo: Eric Sales/ADB

Nonsovereign operations. Total outstanding balances and undisbursed commitments of ADB’s nonsovereign transactions in Papua New Guinea as of 31 December 2022 was $30.68 million representing 0.24% of ADB’s total private sector portfolio.

Operational challenges. PNG faces operational and implementation challenges like other countries in fragile and conflict-affected situations. To improve program implementation, key issues that need to be addressed include delays in procurement and approval of contracts; insufficient government counterpart funding; low capacity of executing and implementing agencies in contract and financial management, as well as social and environmental safeguards; and the weak capacity of contractors and consultants in project management and coordination.

Knowledge Work

ADB provides knowledge solutions, products, and services, in addition to financial assistance. Knowledge solutions in PNG support reforms related to state-owned enterprises, public financial management, and regulatory business environment, and include advice for the development of social protection systems, among other examples. Knowledge products include specific publications linked to project and sector work, as well as regular publications such as the biannual Pacific Economic Monitor series. ADB organizes events that provide updates to stakeholders on the bank’s operations in PNG, economic updates, and tailored workshops under projects or capacity building programs, for example, in financial management.

  ADB Projects in Papua New Guinea Project data sheets for loans, grants, TAs

Future Directions

ADB’s indicative country assistance pipeline for PNG for 2023–2025 outlines planned investments of around $2.07 billion in the following sectors: transport (65%); public sector management (13%); energy (14%); water, sanitation, and hygiene (4%); health (2%); and finance (2%). The pipeline strongly supports climate change mitigation and gender equity. Planned transport, energy, and water projects aim to facilitate significant economic opportunities and support increased access to services to expand employment opportunities, including for women. A proposed project to promote financial inclusion will support increased access to finance. ADB anticipates continuing to finance health infrastructure to strengthen capacity for public health surveillance and COVID-19 testing in rural areas. To address fragility, ADB will continue to support public sector management reforms, including by helping to strengthen state-owned enterprises.

Last updated: 5 May 2023