Papua New Guinea - 2005 Article IV Consultation - Staff Report; Public Information Notice on the Executive Board Discussion; And Statement by the Executive Director for Papua New Guinea (Electronic book text)

1. Macroeconomic performance has improved, but Papua New Guinea remains a poor country highly exposed to commodity price fluctuations. Buoyed by commodity export revenues, GDP growth performance has improved notably in the last several years. Until recently, inflation has remained low, thanks to favorable terms-of-trade and improved macroeconomic management. However, GDP per capita remains low and improvements in living standards have lagged other low-income countries in the region. An unattractive investment environment, due primarily to weak infrastructure, problems with governance, and high crime, constrains more rapid growth of the nonmineral sector. The economy remains highly vulnerable to swings in commodity prices owing to their importance in both export and public revenue.