Papua New Guinea’s 2026 National Budget, delivered last week, outlines record government spending, while keeping PNG on track to achieve a budget surplus by 2027. It also shifts the narrative “towards opportunity”, as one expert notes, with investments in key development priorities. Business Advantage PNG takes a closer look at the implications for business.

The 2026 National Budget outlines K30.91 billion in expenditure, 9 per cent more than in the 2025 budget and 59 per cent more than the Marape-Rosso government’s first budget in 2020. Credit: BAI

Papua New Guinea’s Treasurer Ian Ling-Stuckey unveiled the Marape-Rosso government’s seventh annual budget last week, which, for the seventh consecutive year, promised record spending.

The 2026 National Budget outlines K30.91 billion in expenditure, 9 per cent more than in the 2025 budget and 59 per cent more than the Marape-Rosso government’s first budget in 2020.

“PNG is forecast to benefit from its longest run of sustained real growth in the non-resource economy in its history.”

It forecasts K29.3 billion in revenue next year, which would narrow the deficit to K1.6 billion (1.1 per cent of GDP) and keep the government on track towards achieving its long-stated goal of a surplus in 2027.

GDP growth is projected to be 4 per cent in 2026 (down from 4.5 per cent last year), while annual inflation is forecast to be 4.2 per cent.

Stimulating the non-resource economy

One priority highlighted by Ling-Stuckey in his budget speech to Parliament was a focus on stimulating the country’s non-resource sectors, particularly agriculture.

Treasury estimates the non-resource sector will grow by 4.6 per cent in 2025 (compared to 4.3 per cent for the resources sector), which KPMG PNG’s budget analysis attributes to a combination of higher agriculture commodity prices, improved access to foreign exchange, stronger employment and government spending growth.

PNG is forecast to benefit from its longest run of sustained real growth in the non-resource economy in its history, observes Deloitte PNG’s analysis. The non-resource economy is estimated to have grown at an average of 4.8 per cent per year since 2021, and the Department of Treasury forecasts average annual growth of 4.9 per cent from 2026 to 2030.

The 2026 National Budget outlines “targeted investment” in agriculture, in Ling-Stuckey’s words, including K140 million in funding for land expansion programs, K60 million for the National Rice Development Program, and K10 million for the PNG Oil Palm Industry Corporation, which supports smallholder palm oil growers.

In addition, the Treasurer said the continuation of government-funded intervention programs in the agriculture, fisheries and forestry (AFF) sector will enhance the production of export commodities going forward.

These interventions include freight subsidies, the rehabilitation of run-down plantations, maintenance of commodity road networks, and nursery projects implemented by the PNG Cocoa Board and Coffee Industry Corporation, he said.

Infrastructure development

Ling-Stuckey said investments in roads, bridges, ports and airports – which received a total of K9.1 billion in funding between 2018 and 2024 and will receive K2.03 million in funding in 2026 – will facilitate greater development of the AFF sector, through market access with improved connectivity.

With electricity supply a major challenge for business, state utility PNG Power will receive K226.6 million in funding in 2026 – down from the record K352 million it is set to receive this year.

The Treasurer noted that the Civil Aviation Development Investment Program (CADIP), which is upgrading the country’s airports, will transition to phase two next year after “the successful completion” of the first phase in 2025. CADIP Phase 2 – which is being assisted with loan funding from the Asian Development Bank –will be allocated K87 million in the 2026 budget.

The budget also outlines an increase in the infrastructure tax credit rate (ITC) – used widely by agricultural, mining and energy companies to offset their investments in social infrastructure – from 2 per cent to now 3 per cent of assessable income. According to Deloitte, this will “encourage a greater number of infrastructure projects partnerships, accelerating the recovery period for the cost outlays by private sector partners.”

Funding for security

Security has been a key concern of the business sector for a long time, ranking as the second-biggest impediment to businesses last year, according to the Business Advantage PNG / Westpac 2025 PNG 100 CEO Survey.

The 2026 National Budget provides for a 9.6 per cent increase in funding for law, justice and national security, following a 9.5 per cent increase in 2025, and bringing total spending on security to K2.5 billion.

This includes:

• A 34 per cent increase in funding for police operational costs, including fuel, in 2026;
• a 19 per cent increase in funding for police force wages over a two-year period in 2025 and 2026 as part of a plan to have 10,000 police officers by 2030;
• a 19 per cent increase in funding for operational costs for the judiciary, bringing the total increase in funding for judicial operational costs to 59 per cent over a two-year period;
• a 10.6 per cent increase in funding for the operational costs of the corrective services; and
• a 60 per cent increase in funding for the operational costs of the Office of the Public Prosecutor, over a two-year period in 2025 and 2026.

Given that PNG is highly likely to be greylisted by the global Financial Action Task Force in early 2026, readers may be interested to note the promises of increased spending on the judiciary and Office of the Public Prosecutor, as well as K10 million to enable and support work on anti-money laundering and counter-terrorist financing.

Eyeing more revenues

In his speech, Ling-Stuckey acknowledged that the budget included “only” K430 person for education, K268 per person for health, K219 per person for security, and less than K200 per person for transportation infrastructure (based on the results of the 2025 PNG census, which calculated a total population of 10.19 million people).

Pieter Steyn, Country Managing Partner, KPMG Papua New Guinea. Credit: BAI/Stefan Daniljchenko

“Clearly, still just not enough,” he admitted, adding, “We cannot fix this shortage of development funds in just one year. We need more revenues.”

The government does not want to increase taxes, Ling-Stuckey emphasised.

Instead, he said, it is working to increase revenues through “better policies,” including reforms to compel state-owned enterprises to pay more tax on dividends, and through the new Income Tax Act 2025, which will come into effect on 1 January 2026.

The 2026 Budget is supported by K3.17 billion in concessionary loans and donor grants.

Positive reaction

In their analysis, PNG’s major consulting firms have been generally positive about the budget.

“By combining fiscal discipline with growth-oriented policies, the 2026 Budget positions PNG well for long-term economic stability, improved living standards, and sustainable development,” observed KPMG’s PNG Country Managing Partner Pieter Steyn.

Meanwhile, Deloitte PNG observes that the budget not only continues the government’s fiscal repair strategy but also invests in key development priorities.

“This budget is framed not just as an annual fiscal exercise but as a springboard for transformation,” it notes in its budget alert.

“This confident, forward-looking outlook sees PNG leveraging its inherent strengths to drive inclusive growth. Rather than dwelling on challenges, the narrative is shifting towards opportunity – positioning PNG as an emerging economic and strategic partner with immense promise.”

2026 National Budget Projections

Real GDP growth: 4.0 per cent (2025: 4.5 per cent)

Non-resource real GDP growth: 4.5 per cent (2025: 4.6 per cent)

Inflation: 4.2 per cent (2025: 4.0 per cent)

Government expenditure: K30.92 billion (up 9.0% from 2025 Budget)

Government revenue: K29.31 billion (up 15.3% from 2025 Budget)

Budget deficit: K1.61 billion, 1.1% of GDP (2024: K2.95 billion, 2.2% of GDP)

Government debt: 45.5% of GDP (2025: 48.4% of GDP)

Source: Deloitte, Department of Treasury