THE Bank of Papua New Guinea (BPNG) has reported a decrease in economy due to the SOE measures put in place to control the spread of Covid-19 in the country.
A Monetary Policy Statement released by BPNG on the 31st of March, 2021 stated an estimated contract in the country’s enonomy by three percent in the year 2020.
The State of Emergency (SOE) containment measures restricted mobility of people, and disrupted supply chains and business operations which impacted on government revenue and foreign exchange flows, as well as increased prices.
The sectors hardest hit were the transportation, accommodation (hotels) and food services, and other services. The closure of the Porgera Gold Mine in April, 2020 also impacted adversely on economic activity.
The statement also highlighed that the fiscal operations of the government were adversely impacted by the Covid-19 pandemic in 2020 with lower revenue, resulting in a Supplementary Budget introduced in September, 2020.
The preliminary fiscal outcomes for the 11 months to November 2020 showed a defict of K5.6 milion, compared to the deficit of K2.2 million in the corresponding period of 2019.
The Bank, however projects GDP growth for PNG to recover in 2021 to around 2.5 percent, with high activity in the agriculture, fisheries,forestry and mineral sectors as well as a general pickup for most other businesses.
With the current increase in the number of Covid-19 cases as well as the impact caused by any further tightening of the containment measures, the bank states that a full rollout of the vaccination program to the wider population would assist the economy recovery process.
