Despite abundant natural resources, PNG has failed to provide sufficiently broad-based economic and social opportunities for the majority of its population. The challenge is how to capitalise on the natural resources to create more broad-based economic opportunities, for local producers, entrepreneurs and small and medium enterprises. The economy is also constrained by geographical factors and a widely dispersed population, which raise the costs of infrastructure and service provision and reduce market access.
Performance has been undermined by poor economic management, governance and coordination, with deficient expenditure and accountability of spending on core public goods such as transport infrastructure, but also on effective provision of law and order, education and health. This together with poorly-performing state-owned enterprises, often enjoying a monopoly position, seriously undermines service provision, pushes up the cost of doing business, and reduces the competitiveness of the private sector generally.