Papua New Guinea

The purpose of this Country Strategy Paper (CSP) is to provide the overall framework for EC cooperation with Papua New Guinea (PNG) in the context of the support to be provided under the 10th EDF (2008-2013). The framework is based on the global objectives of the EC-ACP co-operation, PNG’s own development strategy, an analysis of the political, economic and social situation in the country, and an assessment of the past cooperation programmes of EC and other donors. The CSP concludes by proposing an EC response strategy for the 10th EDF with the indicative planning further elaborated in the National Indicative Programme (NIP).

Papua New Guinea’s population is estimated at 6.1 million, with an annual growth rate of 2.7 %. Only 15 % of the total population reside in urban areas. With a rich cultural diversity and a wealth of different traditions, and with more than 800 languages, PNG cannot be compared with any other country. Its land area is 462,820 sq km.

PNG has markedly improved macro-economic indicators and management over the last three years, supported by favourable prices for key export commodities. However, major challenges remain to ensure continued reform momentum and achieve sustainable growth at a level that may have a marked impact on poverty alleviation. In spite of positive economic growth, wealth has not been evenly redistributed and provision of basic services, which to a large extent is the responsibility of the sub-national government level, is generally seen to have deteriorated over the last decade or so.

PNG’s development policy is laid down in the Medium Term Development Strategy 2005-2010 (MTDS) where seven key priority areas have been defined. Since then, PNG has made efforts, with different degrees of success, to redirect public spending towards these priority areas and sought to align donors behind the MTDS. Continued reform efforts will be needed to enhance the effectiveness of spending within these priority areas.

Assistance under the 9th EDF was concentrated in human resource development and rural water and sanitation with an important contribution to governance and capacity building as a non-focal sector.

Under the 10th EDF, the EC response strategy will target two focal sectors: Support to rural economic development and support to human resource development with a focus on basic education and vocational training.

The 10th EDF foresees an indicative base allocation of € 130 million of programmable funds (envelope A) and € 12.3 million for certain unforeseen needs (envelope B). It is foreseen that about 55 % of envelope A would be used to support rural economic development and about 30 % to support human resource development, and the rest for support to non-focal areas (support to Non-State Actors; Trade Support Programme and Technical Cooperation Facility).