Papua New Guinea Economy

Economy

Papua New Guinea is richly endowed with natural resources, but exploitation has been hampered by rugged terrain and the high cost of developing infrastructure. Agriculture provides a subsistence livelihood for 85% of the population. Mineral deposits, including oil, copper, and gold, account for 72% of export earnings. The economy has improved over the past two years, following a prolonged period of instability. Former Prime Minister Mekere MORAUTA had tried to restore integrity to state institutions, to stabilize the kina, restore stability to the national budget, to privatize public enterprises where appropriate, and to ensure ongoing peace on Bougainville. Australia annually supplies $240 million in aid, which accounts for 20% of the national budget. Challenges face Prime Minister Michael SOMARE, including gaining further investor confidence, continuing efforts to privatize government assets, maintaining the support of members of Parliament, and balancing relations with Australia, the former colonial ruler.