World Bank Urges PNG to Turn Resource Wealth into Jobs Through Human Capital Investment

The report highlights a critical gap between resource extraction and public benefit, suggesting that PNG is not fully capturing the value of its natural wealth.

Papua New Guinea (PNG) could unlock a job-rich, high-growth economy by better leveraging its vast natural resources—but only if it significantly increases investment in its people and strengthens public finances, according to a new World Bank Public Finance Review.

The report, “Converting Resource Wealth into Human Capital,” outlines how the country can transform its resource-driven economy into one that delivers jobs, productivity, and long-term prosperity for its rapidly growing young population.

Ambitious Targets at Risk Without Reform

PNG has set bold national goals, including:

• Creating 1 million jobs

• Expanding the economy to K200 billion by 2030

• Achieving a balanced budget by 2027

However, the World Bank warns that meeting these targets will depend on stronger fiscal systems and smarter public spending, particularly in human capital development.

Resource Boom, Limited Public Gains

Despite a significant expansion in the resource sector over the past decade, government revenues have remained strikingly low:

• Resource revenues averaged just 1.9% of GDP (2013–2024)

• This comes even as production nearly doubled during the same period

The report highlights a critical gap between resource extraction and public benefit, suggesting that PNG is not fully capturing the value of its natural wealth.

Human Capital Crisis Holding Back Growth

At the same time, weak investment in health and education is limiting productivity and economic potential:

• Nearly 50% of children are stunted

• 1 in 25 children die before age five

• Education outcomes rank among the lowest globally

• A child born today is expected to achieve only 42% of their productivity potential

These indicators underscore the urgency of investing in human capital to support sustainable growth.

Three Key Reform Priorities

The World Bank identifies three strategic priorities to unlock PNG’s economic potential:

1. Increase Resource Revenues and Broaden the Tax Base

• Improve fiscal returns from extractive industries

• Diversify revenue sources beyond the resource sector

2. Improve Public Spending Efficiency

• Strengthen budget execution and accountability

• Ensure funds are directed toward high-impact areas

3. Scale Up Investment in People

• Expand primary healthcare systems

• Strengthen education quality and access

• Develop a national social protection system

Investment Gap: 4.5% of GDP Needed Annually

To address these challenges, the report estimates PNG will need to increase annual spending by approximately 4.5% of GDP—targeted toward:

• Smarter education programmes

• Expanded healthcare services

• Social safety nets for vulnerable populations

Such investments are seen as critical to building a productive workforce capable of driving economic diversification.

A Demographic Opportunity—If Harnessed

With a young and growing population, PNG has a significant demographic advantage. However, without adequate investment in health and skills, this could become a missed opportunity.

“The future of any country depends on the health, skills, and energy of its young people,” said Han Fraeters, World Bank Division Director for PNG and the Pacific.

“With focused actions, Papua New Guinea can turn its natural wealth into stronger services, a more diverse economy, and more jobs for the next generation.”

From Resource Dependency to Inclusive Growth

The report underscores a broader shift in development strategy: moving from reliance on natural resources to building human capital as the foundation of economic growth.

By aligning fiscal reforms with investments in people, PNG has the potential to:

• Increase productivity

• Create sustainable employment

• Reduce inequality

• Build resilience against economic shocks

Outlook: A Critical Policy Window

As global demand for natural resources remains strong, PNG faces a crucial window to reform its fiscal systems and invest in its population.

The World Bank’s findings suggest that without decisive action, resource wealth alone will not deliver inclusive growth—but with the right policies, it could become a powerful engine for jobs and development.