The booming oil and gas sector in Papua New Guinea (PNG) is expect to boost the country’s economic growth to 6.2% according 2014 Budget Alert, an analysis done Deloitte Touche Tohmatsu experts.
The 62.2% economic growth, dubbed as one of the highest growth rates in the region will be largely based on the expected growth in the oil and gas sector due to the commencement of gas production in 2014.
The report also notes that the non-mining GDP is only expected to grow by 1.6%, an unjustifiably low percentage compared to mining GDP.
“The oil and gas sector is expected to grow 354% in 2014. This growth will be a direct result of gas production, which will substantially override the natural anticipated decline in oil production. Substantial increases in growth are again expected in 2015 with full gas production having commenced. The increase in gas production is expected to override the decline in the oil fields.
“The continued depressed global economic conditions which have led to a decrease in commodity prices could result in lower than expected growth in this sector and lower export receipts.“This would directly affect the Government’s revenue and domestic economic growth and is a key risk to the economic and fiscal outlook and 2014 Budget” the report says.
PNG loop notes that the 2014 Budget provides no specific expenditure plan for the oil and gas sector.
A challenge for the government according to Asian Development Outlook 2014, is to share the benefits of growth and to narrow regional inequality by expanding services in rural areas and employment through a more conducive business environment.