The credit rating agency Moody’s said Papua New Guinea’s credit profile reflects significant pressure on government financing, and a ratings upgrade is unlikely.
Moody’s new annual credit analysis says the country’s economic strength was low and its institutional strength was very low, while its fiscal strength and susceptibility to event risk was moderate, RNZI reports.
It said the pressure stemmed from large borrowing requirements, external liquidity challenges, weak governance, low incomes and poor infrastructure.
It also said February’s earthquake and the continuing aftershocks in the Highlands, which forced a month-long shutdown of the lucrative LNG project, would also take an economic toll.
Moody’s changed PNG’s credit outlook from stable to negative in March, reflecting elevated liquidity risks, though it says PNG’s strengths include strong resource-backed growth potential and relatively low government debt.
PNG’s currently credit rating is B2 negative, and the Moody’s report said it could be downgraded further if the government’s reliance on high-interest borrowing to plug a fiscal deficit increases.