Papua New Guinea’s 2024 Final Budget Outcome offers a familiar mix of encouraging execution and persistent weaknesses. Expenditure was kept in check, capital investment improved, and the deficit came in marginally better than budgeted. However, revenue underperformance, growing debt, and uneven service delivery continue to weigh on fiscal stability.

Revenue disappoints

Total revenue and grants in 2024 amounted to K20.8 billion, which was K2.6 billion (11%) below the K23.4 billion budget target. This shortfall was driven primarily by weaker-than-expected tax collections and underperformance in non-tax revenue.

Tax revenue reached K18.4 billion, falling K247.8 million short of projections. Grants were also below expectations at K1.2 billion versus the K2.2 billion budget estimate. Non-tax revenue was similarly subdued: total dividends paid to the State amounted to K642.3 million, K507.7 million below the budgeted K1.15 billion. Notably, dividend contributions from Kumul Petroleum Holdings Limited (K401.5m) and Kumul Consolidated Holdings (K82.2m) were well below their targets.

These revenue gaps reflect deeper structural issues in PNG’s fiscal system. While the budget framework sets ambitious targets, limited administrative capacity, ongoing SOE underperformance, and patchy compliance continue to constrain domestic revenue mobilisation.

Expenditure largely under control

Total expenditure and net lending for 2024 reached K24.76 billion, approximately K2.6 billion (10%) below the K27.4 billion budget. The government managed to restrain spending, particularly in operational and capital components. Operational spending came in at K16.2 billion (97.1% of budget), while capital investment totalled K6.4 billion, about 87.7% of planned spending.

Capital investment showed signs of improvement, with notable increases in the GoPNG Public Investment Program (K6.4b), but donor-funded capital outlays remained low, with donor grants spending at just 53.5% of budget. Similarly, concessional loan drawdowns came in at K998.9 million, well below the budgeted K1.2 billion.

Education and health remained top spending priorities, receiving K2.3 billion and K2.1 billion, respectively, signalling continued commitment to basic service delivery. However, service delivery at the subnational level remains a challenge, as funds often fail to translate into timely or effective outcomes.

A lower-than-expected deficit

The final budget deficit was K3.93 billion, equivalent to 3.2% of GDP. This was marginally lower than the original K3.98 billion (3.3% of GDP) estimate. The improvement, however, came from lower-than-expected expenditure rather than improved revenue. PNG’s non-resource primary balance—a key measure of underlying fiscal sustainability—stood at -5.9% of non-resource GDP, a modest improvement from -7.7% in 2023.

Debt continues to rise

Total public debt rose to K60.5 billion in 2024, or 49.4% of GDP. This was slightly lower than the budgeted K61.9 billion but up from K57.9 billion in 2023. Domestic debt stood at K31.2 billion, while external debt reached K29.3 billion. Notably, external borrowing increased, with extraordinary financing (such as programme loans) rising to K2.8 billion, exceeding the K1.9 billion budget by K894 million. Domestic borrowing, however, came in well below budget at K231.7 million compared to the K2.3 billion planned, largely due to lower-than-expected Treasury Bill uptake.

The rising stock of debt and the shift in its composition warrant close attention. While the debt-to-GDP ratio remains below 50%, interest payments are rising, and the growing reliance on concessional and extraordinary financing poses risks if global financial conditions tighten.

Conclusion

The 2024 Final Budget Outcome shows a government striving for improved fiscal discipline, with capital spending execution improving and the overall deficit under control. However, revenue remains weak, SOEs continue to underperform, and debt pressures are building.

The government’s reform agenda—particularly around tax administration, SOE governance, and subnational service delivery—remains crucial. Without progress on these fronts, PNG risks falling into a cycle of sound budget planning but weak implementation.