Papua New Guinea

Key trends and development challenges

Papua New Guinea (PNG) is a developing state located in the Pacific sub-region of Melanesia. With a GDP of $31 billion, PNG is the largest economy in the Pacific and accounts for 71% of regional GDP. PNG has a population of around 10.5 million, resulting in a GDP per capita of $2,934 — the third-lowest in the Pacific. Its exclusive economic zone (EEZ) spans 2.4 million square kilometres, the 16th-largest globally, comparable in size to the EEZ of Norway. At 0.576, PNG’s Human Development Index score ranks 160th out of 193 countries and is the lowest in the Pacific.

PNG has the lowest official development assistance (ODA) to GDP ratio in the Pacific, with aid accounting for 4% of GDP. In a global context, PNG has only moderate levels of ODA inflows, with its aid as a share of GDP ranking 65th among 125 developing countries. Total GDP growth was projected at 4.7% in 2025, with the non-resource sector — which accounts for around 72% of the economy — growing 5.2%, its fifth consecutive year above 4%.

The PNG government is pursuing a 13-year Budget Repair Plan running from 2022 to 2034, targeting a budget surplus by 2027, with public debt projected at 47.4% of GDP in 2025, down from a peak of 52% in 2023.

Between 2008 and 2024, annual official development finance (ODF) disbursements to PNG — including grants, loans, and other forms of assistance — averaged $1.3 billion. PNG has seen a dramatic increase in total ODF received since 2019, with total funds more than doubling since 2017. This uptick in ODF was driven in large part by annual budget support loans from the Australian government, as well as Asian Development Bank pandemic recovery loans. Between 2008 and 2024, PNG received 44% of its development finance in the form of loans. As a share of total received development support, loan-financed projects have increased significantly. Between 2008 and 2015, loans accounted for around a third of total ODF. Since 2016, this has increased to more than half.

Development partners and sector trends

Between 2008 and 2024, the vast majority of ODF support to PNG came from its largest development partners, led by Australia (51%), the Asian Development Bank (16%), China (10%), Japan (5%), and the World Bank (4%). Australia’s largest ODF disbursements to PNG have all been budget support measures. The portion of PNG’s total ODF provided by multilateral agencies changed dramatically in the wake of the pandemic. Prior to 2020, multilaterals made up a quarter of support received by the country. From 2020 onwards, the share jumped to more than a third, with the uptick driven largely by increased support from the Asian Development Bank.

ODF in PNG was broadly consistent with regional trends in terms of sector distribution. PNG’s only major sectoral outliers are the health, transport, and industry, mining and construction sectors. Spending on projects focused on infrastructure overtook education and health in 2013, a trend maintained through to 2024.

Since 2008, PNG has received $476 million in development financing with a “principal” focus on either climate adaptation or mitigation. Over this same period, the country has seen $2.9 billion in development financing with a “significant” focus on climate outcomes. Over the past decade, PNG has seen a substantial rise in spending on climate-targeting projects. As a share of total ODF received by PNG since 2008, “principal” climate projects made up just 2% of total spending, well below the regional average of 8%. Spending on “significant” climate projects in PNG made up 13% of incoming funds, also below the regional average of 17%. These gaps reflect PNG’s size, both in population and economy, relative to the rest of the Pacific.

Between 2008 and 2024, PNG received $579 million in development financing with a “principal” focus on gender equality, and $9.3 billion in development financing with a “significant” focus on gender equality. “Principal” gender equality financing constituted 2% of ODF received by the country, in line with the regional average. Conversely, “significant” marked gender financing made up 41% of incoming ODF, well above the regional average of 23%. This high share is largely a product of gender equality goals being included in major budget support programs, somewhat distorting the picture. The largest project directly targeting gender equality in PNG was the multi-year $42 million Gender Equality and Gender-Based Violence initiative, funded by Australia.