ADB's Work in Papua New Guinea

Papua New Guinea (PNG) is a lower-middle income country, classified by ADB as a fragile and conflict-affected situation and a small island developing state. The economy is dominated by the capital-intensive mineral and petroleum extractives sector and the labor-intensive agricultural sector. The coronavirus disease (COVID-19) pandemic has significantly affected PNG’s economy, which had contracted by 3.3% in 2020, followed by a weak recovery to 1.3% growth in 2021.

ADB is one of the country’s largest sources of official development assistance, with average annual lending of $382 million over the 5 years to 2021. ADB’s support is aligned with the Government of PNG’s development plans, including the Medium-Term Development Plan 2018–2022, Development Strategic Plan 2030, and Vision 2050.

To date, ADB has committed 262 public sector loans, grants, and technical assistance totaling $4 billion to Papua New Guinea. Cumulative loan and grant disbursements to PNG amount to $3.07 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 17 loans and 1 grant worth $1.43 billion.

ADB has provided comprehensive support to help PNG in its recovery from 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. A separate grant for $3 million under the Asia Pacific Disaster Response Fund helped the government meet immediate pandemic related needs, such as purchasing essential medicines and medical equipment. A reform program that has disbursed $300 million of budget support in 2020 and 2021 aims to strengthen the operational performance and financial sustainability of state-owned enterprises (SOEs). An 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. The program is also upgrading bridges, improving road safety, establishing logistics platforms and services for agricultural production, and supporting transport sector reforms.

A grid development project will upgrade and extend the transmission and distribution grid in the national capital, Port Moresby, by 2022. ADB has also supported reforms in the health sector. The program provides direct investments in the health system.

Villagers visit the Tsinjipai Community Health Post for information and treatments. Photo: ADB

Nonsovereign operations. Total outstanding balances and undisbursed commitments of ADB’s nonsovereign transactions in Papua New Guinea as of 31 December 2021 was $31.67 million representing 0.23% of ADB’s total private sector portfolio.

Operational challenges. PNG faces operational and implementation challenges similar to 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 counterpart funding; low capacity of executing and implementing agencies in contract management, financial management, and social and environmental safeguards; and the weak capacity of contractors and consultants in project management and coordination.

In 2021, the COVID-19 pandemic affected most projects and related civil works contracts, causing implementation delays due to international lockdowns and shipping and logistical constraints, among others. Contract management was challenging for active contracts and projects, particularly in energy and civil aviation.

Knowledge Work

In addition to financial assistance, ADB provides knowledge solutions, products, and services. For example, support for reforms related to SOEs, public financial management, and regulatory business environment, and advice for the development of social protection systems. Knowledge products include specific publications linked to project and sector work, as well as more regular publications, such as the 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 program, 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, 2022– 2024, outlines planned investments of around $2.27 billion in transport (55%); public sector management (19%); energy (20%); education (2%); health (2%); finance (2%); and water, sanitation, and hygiene (1%). 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. ADB will also strengthen technical and vocational education and training institutions. A proposed project to promote financial inclusion will support increased access to finance. ADB anticipates helping 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 SOEs.

Last updated: 25 August 2022