RESEARCH RANKS PNG’S GDP ABOVE OTHERS IN PACIFIC

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as captured by a highly negative G issuer profile score (G-4). Weaknesses in government effectiveness, control of corruption and rule of law, while the credibility of legal structures is also limited. While ongoing support from development partners provides technical capacity in some areas, overall structural reforms remain limited.

• GDP per capita (PPP basis, US$): 3,921 (2021) (also known as Per Capita Income) • Real GDP growth (% change): 1.5% (2021) (also known as GDP Growth) • Inflation Rate (CPI, % change Dec/Dec): 5.7% (2021) • Gen. Gov. Financial Balance/ GDP: -6.7% (2021) (also known as Fiscal Balance) • Current Account Balance/GDP: 21.2% (2021) (also known as External Balance) • External debt/GDP: 71.9% (2021) • Economic resiliency: b2 • Default history: No default events (on bonds or loans) have been recorded since 1983.

On 07 November 2022, a rating committee was called to discuss the rating of the Papua New Guinea, Government of. The main points raised during the discussion were: The issuer’s economic fundamentals, including its economic strength, have not materially changed. The issuer’s institutions and governance strength, have not materially changed. The issuer’s fiscal or financial strength, including its debt profile, has materially increased. The issuer’s susceptibility to event risks has not materially changed.

Factors That Could Lead To An Upgrade Or Downgrade Of The Ratings

An acceleration in fiscal deficit and debt reduction along with a significant reduction in gross borrowing requirements than Moody’s currently expects would lead to upward pressure on the rating. Improvements in the management of the exchange rate that facilitates the development of the non-resource sector and enhances economic diversification, while simultaneously maintaining macroeconomic and external stability, would be credit positive. Over the longer term, the implementation of key resource sector investments that generates positive economic spillovers and boosts growth potential would also contribute to upward rating pressure.

The rating could be downgraded if the prospects for fiscal consolidation and associated stabilization of the government’s debt, as well as the implementation of large investments in PNG’s natural resources wealth, is significantly weaker than currently assumed. In addition, lackluster implementation of the government’s reform agenda that contributes to higher liquidity stress--including more constrained access to external concessional financing and a sustained decline in the stock of foreign-exchange reserves--would also prompt a downgrade.

The principal methodology used in these ratings was Sovereign Ratings Methodology published in November 2019 and available at https:// ratings.moodys.com/api/rmc-documents/63168 . Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.

The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable.

REGULATORY DISCLOSURES

For further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found on https://ratings.moodys.com/ rating-definitions .

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the issuer/deal page for the respective issuer on https://ratings.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity. The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website https://ratings. moodys.com. Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://ratings.moodys. com/documents/PBC_1288235 .

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on https://ratings.moodys.com.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody’s office that issued the credit rating is available on https://ratings. moodys.com. Please see https://ratings. moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating. Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each credit rating.

Research Ranks PNG’S GDP Above Other Pacific Nations

By Paul Oeka

Despite major setbacks faced by many economies of Island Nations throughout the Pacific due to the global Covid-19 pandemic and the Ukraine-Russian war from 2019 to 2021, a recent study and report released by the Australian National University (ANU) show that PNG’s Gross Domestic Product (GDP) has been progressing well compared to other Pacific Island Nations.

The University’s research report reveals that PNG’s non-resources GDP growth rate was progressing at a level of 7 percent per annum while other pacific island countries performed relatively low. And this is expected to increase by 13.2 percent next year. In comparison, the analysis made by the Australian National University shows that the Solomon Islands GDP growth rate was recorded at a negative 6 percent, Samoa’s negative 11 percent, Fiji at a negative 1 percent, and Vanuatu at 0 percent.

Treasurer Ian Ling-Stuckey was moved by the ANU report and expressed his gratitude to the Government for sustaining the economy under trying times.

“This is very good news for the Government in sustaining the economy during the global Covid-19 pandemic and the Ukraine-Russian war”. Even when we look at total GDP, including the resource sector PNG was only behind Tuvalu in which they have a population of about 1000th to that of PNG”. Treasurer Ling-Stuckey said.

PNG has weathered and is expected to weather the global economic storms from Covid-19 and the Ukraine-Russian war much better than our neighbours, “the Treasurer said. Ling-Stuckey stated that some of these had to do with different economic structures but much is due to good, responsible, and responsive economic management. While PNG has performed very well in terms of the Pacific, Treasurer Ling-Stuckey stressed that the performance is just above developing countries as a whole.

“This is why we need to continue on our path of budget repair, strengthening of institutions, and increasing our non-resource GDP growth, these are vital steps towards reaching economic independence”. The country’s Treasurer said.