ADB downgrades outlook on PNG economic growth

5:41 pm on 1 April 2016

The Asian Development Bank has downgraded its outlook on PNG's economic growth this year to 4.3 percent.

The Manila-based regional development bank made the assessment in its Asian Development Outlook 2016 report launched in Sydney this week.

The ADB said PNG faced serious fiscal challenges, as weak commodity prices had resulted in shortfalls in mineral sector revenues.

Consequently it said GDP growth was forecast to ease to 4.3 percent in 2016, less than half last year's rate, and to slow further to 2.4 percent in 2017.

However, prime minister Peter O'Neill told the Post Courier the ADB had always been ultra conservative in its outlook, claiming that PNG's growth projection was still better than many countries around the world.

While the PNG economy grew by 7 percent last year, the ADB's projection for this year constitutes a big drop.

The downgrade by the ADB comes after Mr O'Neill revealed that the Bank of PNG is negotiating with the World Bank's International Finance Corporation to create a temporary drawdown facility of $US250 million, which local banks could access to overcome foreign currency issues.

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