Country profile

Papua New Guinea has one of the most geographically challenging environments in the world for development, with the rugged interior of Papua and more than 500 smaller islands.  It is also notable for its cultural and linguistic diversity, with more than 700 languages.  It presents an extremely difficult environment for service delivery and infrastructure development. 
 

PNG is a low-income country, with 40% of the population living below the US$1 per day poverty line.  The economy is dominated by the extractive industries, which drove 6.2% growth in 2007 on the back of improved economic management and budgetary performance.  However, there continue to be major constraints on private sector development.  Mineral wealth has yet to translate into improved development outcomes.  Life expectancy remains low, and infant and maternal mortality rates are some of the highest in the Pacific region.  Achieving MDG targets, particularly educational outcomes ,environmental sustainability, and HIV/AIDS prevalence, is proving to be challenging.  The lack of economic opportunities in the rural areas is driving rapid urbanisation, with associated problems of law and order. 
 

The government’s development agenda is set out in its second Medium-Term Development Strategy 2005-2010, plus a number of sectoral strategies.  Government has set itself a target of devoting 55.5% of the national budget to MTDS priority areas.  However, a Department of Planning assessment in 2007 concluded that there had been limited development impact since 2000. 
 

ODA flows amounted to US$279 million in 2007, with Australia by far the dominant donor at 70%.  Aid is only 5.5% of GNI, but contributes 80% of the development budget.  Government has traditionally played little role in donor coordination.  However, it concluded the Kavieng Declaration on Aid Effectiveness in 2008, signalling its intention to lead the aid effectiveness agenda.  It is also developing an Aid Information Management System.  PNG participated in the Paris Declaration monitoring survey for the first time in 2008.