A five-year strategic partnership between the Asian Development Bank (ADB) and the Government of Papua New Guinea (PNG) alongside a three-year US$2.93 billion lending program aims to support diversified, sustained, and inclusive growth in the country.
The ADB Country Director in Papua New Guinea, David Hill, said the proposed lending program of $2.93 billion for 2021−2023 was outlined in the bank’s PNG Country Operations Business Plan (COBP).
This document provides an annually updated three-year rolling investment plan contained within the more general Country Partnership Strategy (CPS) and it is within the COBP that specific projects are identified.
The broader partnership strategy for 2021–2025 will be implemented through three pathways:
Enabling diversified economic growth through improvements to infrastructure, including in transport and energy, and to bolster the private sector – such as micro, small and medium-sized enterprises (MSMEs) – through a more competitive yet transparent business environment and more ADB-supported private sector transactions.
Improving governance, financial management, and institutional strengthening across all institutions that ADB engages within PNG, including state-owned enterprises (SOEs), to improve efficiency and public service delivery and to cope with fragility (this pathway incorporates responding to exogenous shocks, including the COVID-19 pandemic).
Addressing inclusivity and building resilience, with a focus on improving human development outcomes and building resilience to climate and disaster risks.
“The CPS is closely aligned with PNG’s national development plans, including the Development Strategic Plan for 2010–2030 and the Medium Term Development Plan III (2018–2022),” Mr. Hill added.
He also indicated that several projects in the COBP are expected to be pushed back from 2021 until 2022 due to the delays that have resulted from the coronavirus pandemic, for example, ADB staff and consultants who are preparing background work relating to the planning and design of future projects have been limited in their activities due to the travel restrictions imposed.
According to the ADB official, projects in PNG take longer to implement than in some other countries.
“This may be due to a number of factors including: capacity deficits, changes in priorities due to changes in administrations, or changes in internal government processes. Delays in counterpart funding have slowed project implementation at times in the past, as have constraints on accessing foreign currency. Land acquisition needs and associated ownership disputes can present further challenges given PNG’s communal land ownership practices, which is something that we experience in most of our Pacific Island Countries,” the official explained.
He outlined three risks to the successful implementation of the CPS, mentioning a protracted economic downturn, exogenous shocks, and deterioration in the security environment.
“A key theme of the CPS is fragility and a differentiated approach. In line with ADB’s Strategy 2030, and given that PNG is classified as a fragile and conflict-affected situation, the CPS puts a major emphasis on institutional development, governance reforms, and essential infrastructure for connectivity and service delivery” he said.
Essential infrastructure includes a focus on transport and energy, where ADB has significant experience in PNG and therefore a comparative advantage.
Institutional strengthening will be mainstreamed with extra support for procurement, project implementation, and capacity building.
PFM and the reform of SOEs will be a focus area. Additionally, the CPS seeks to build resilience to economic and disaster-related shocks, intensify support for gender equality, promote greater consultation with civil society, and support climate change mitigation.
More than 75% of new lending in the CPS period is expected to focus on essential infrastructure.
Transport and energy will dominate, with smaller interventions in water and urban infrastructure, reflecting government priorities.
This focus is appropriate given the large infrastructure gap in PNG and the country’s need for broad-based growth, as well as ADB’s established project implementation capacity and comparative advantage in these sectors.
A further 15%–20% is expected to support Public Sector Management operations, which may occur through policy-based lending operations to assist economic and public sector reforms.
Other interventions, such as those in the finance and social sectors, will be smaller but still important, allowing ADB to offer an integrated program of support.