World Bank Approves $150 Million to Support Reforms and Resilience in PNG

Papua New Guinea’s economy is heavily dependent on mining, oil and gas, yet the majority of the population earns its living through agriculture and informal activities.

The World Bank Board of Executive Directors has approved US$150 million in budget support for Papua New Guinea (PNG) to advance key reforms aimed at strengthening public revenues, facilitating trade, creating jobs and improving protection for communities against disasters and health emergencies. The financing is designed to help stabilise the economy and lay the foundations for more inclusive and resilient growth.

Papua New Guinea’s economy is heavily dependent on mining, oil and gas, yet the majority of the population earns its living through agriculture and informal activities. For many years, low and volatile government revenues have constrained public investment in essential services such as health, education and infrastructure, limiting job creation and leaving communities vulnerable to shocks.

The new World Bank-supported reform programme seeks to address these challenges by helping PNG secure stronger and more predictable returns from its natural resource wealth, while also opening up new economic opportunities for farmers, agribusinesses and small enterprises. At the same time, it strengthens systems that enable the government to respond quickly and effectively to natural disasters and health crises.

At the core of the reform agenda is the newly adopted Income Tax Bill, which introduces a capital gains tax and reinforces measures to ensure that overseas companies accurately report and pay taxes on profits repatriated out of the country. These reforms aim to modernise PNG’s tax system, broaden the revenue base and improve fairness and transparency in taxation.

Complementing these changes is a strengthened State-Owned Enterprise (SOE) Dividend Policy, which mandates higher and more consistent dividend payments from SOEs to the national budget. Together, these measures are expected to boost domestic revenues and create greater fiscal space for investment in priority development sectors.

Commenting on the approval, Han Fraeters, World Bank Country Director for Papua New Guinea, Solomon Islands and Vanuatu, noted that PNG has not been capturing the full benefits of its vast resource endowment. He emphasised that stronger revenue systems can enable greater investment in health, education and jobs, while underlining the importance of effectively implementing the newly adopted reforms.

The reform programme also includes initiatives to facilitate trade and support private sector growth. The proposed Biosecurity Bill 2025 aims to strengthen sanitary and phytosanitary systems, helping PNG meet international standards and improve market access for agricultural exports. Meanwhile, the National Trade Portal will streamline trade procedures, reduce red tape and lower costs for exporters and importers, supporting agribusiness development and job creation.

A key feature of the financing package is a US$50 million Catastrophe Deferred Drawdown Option (Cat DDO), which allows the government to immediately access funds following a major disaster. This marks the first time PNG has used the Cat DDO instrument, providing a vital source of rapid liquidity to maintain essential services and support affected communities in the aftermath of natural disasters.

As part of this disaster risk financing, the government will strengthen national preparedness and response systems. Planned measures include the establishment of real-time health data systems to improve surveillance and emergency response, as well as enhanced search-and-rescue coordination to ensure faster and more effective disaster response.

Overall, the World Bank-supported programme represents a comprehensive effort to help Papua New Guinea build a more stable, diversified and resilient economy, better equipped to deliver services, create jobs and protect its people from future shocks.