KEY POINTS
- Papua New Guinea paid K801.4 million in fuel subsidies by the end of July 2026. Treasurer Ian Ling-Stuckey now estimates the full-year cost at around K1.5 billion, which is K390 million above the K1.11 billion package in the supplementary budget.
- The September 2026 supplementary budget defers projects to 2027 to keep the year on target, but it names none of them and gives no value.
- The first-half deficit reached K2.4 billion, against a full-year target of K1.608 billion. Treasury is asking Kumul Petroleum for at least K1,666.7 million in dividends, against a K650 million offer.
Papua New Guinea paid K801.4 million in fuel subsidies between the scheme’s April launch and the end of July, The National reported. Treasurer Ian Ling-Stuckey told the paper in August that the full-year bill would come to around K1.5 billion “because prices have gone up again.” His supplementary budget speech in September said projects “will be deferred until 2027 for implementation” to keep the year’s books on target.
The speech named none of those projects. It put no value on the spending pushed into next year.
A K1 billion promise, a K1.5 billion bill
Prime Minister James Marape announced the relief package at a Port Moresby press conference on 9 April, the government’s information service reported, presenting it as a K1 billion programme. As the service described the scheme, importers keep paying international prices and sell locally at a stabilised price, with the state covering the difference.
“We intend to maintain fuel prices at March levels going forward,” Marape said on 15 April, according to a statement from his office. In the same statement he said the relief would “help bridge the gap” between what importers pay on the international market and what they can charge at home.
On 1 April, a week before the launch, Business Advantage PNG had reported that Ling-Stuckey flagged a possible return of a fuel excise cut and a GST exemption for fuel if the crisis persisted. Takafumi Kadono, the Asian Development Bank’s country director, told the same publication that measures to reduce fuel consumption had to be introduced urgently.
Ling-Stuckey’s September speech said the package had kept prices frozen at March levels while costs rose in neighbouring countries.
A scheme that kept getting longer
On 17 May, Marape’s office said the government would maintain support through June, then assess assistance for June to September, and possibly continue to the end of the year. The statement said the government was working with importers to fill the financial gap created by higher world oil prices. “We do not want our people digging deeper into their pockets,” Marape said.
The National reported on 20 May that the four fuel importers, Puma Energy, Mobil Oil New Guinea, Islands Petroleum and Niugini Oil, had received a significant part of their subsidies, and that service stations had returned to normal operations. Marape and Ling-Stuckey had met industry executives to speed up the flow of funds. “We are confident that the Government will fulfil its commitment to fund subsidies in advance to June 7, this year,” Richard Kassman, senior vice-president of the PNG Chamber of Resources and Energy, told the paper. PNG Core said the programme needed large upfront funding, including foreign exchange arranged months ahead.
By 13 August, Ling-Stuckey was telling The National the subsidy would continue until the end of the year. The government’s estimate, he said, was that “the subsidy package will not be K1 billion, but around K1.5 billion.”
Marape’s office put spending at approximately K800 million on 3 September and said it would pass K1 billion by year end. The supplementary budget, tabled later that month, costed the package at K1.11 billion: at least K1 billion in direct subsidy, plus about K110 million in revenue given up by exempting fuel from GST.
Ling-Stuckey’s own August estimate of K1.5 billion is K390 million, or 35%, higher than the package Parliament was asked to fund. It is also 50% above the K1 billion Marape announced in April. Exepreneur could not find a published reconciliation of the K1.11 billion and K1.5 billion figures.
Business Advantage PNG reported in September that the subsidy will run until at least December.
How the gap was filled
Rural and Economic Development Minister Joseph Lelang, who chairs the State Task Force overseeing the fuel crisis, had already acknowledged the subsidy was unbudgeted, though he called it sustainable, NBC reported. The K30.9 billion 2026 Budget was tabled in November 2025, five months before the scheme began.
According to the Treasury speech, K461 million is covered by transfer provisions that move money out of other votes, and by reductions already made to earlier appropriations. On Exepreneur’s calculation, that leaves K539 million of the K1 billion direct subsidy needing fresh appropriation. The K110 million GST concession appears in the accounts as lower revenue.
The speech also cut unspent goods and services budgets by 10% for core agencies and by just over 50% for non-core agencies. It introduced strict controls on travel and allowances for every department. And it deferred projects.
The original budget carried K7.7 billion for the Public Investment Programme, NBC reported in November 2025, with the Connect PNG road programme expected to receive about K1.7 billion of it. The supplementary budget does not say how much of either now waits for 2027.
The half-year hole
Treasury’s speech put the mid-year deficit at K2.4 billion and said policy actions of some K2.9 billion were needed to bring the year back on target.
Reuters reported on 6 October that PNG had missed its first-half fiscal deficit target. The disclosure came in coverage of an International Monetary Fund staff-level agreement that could release up to US$189 million to the government, taking total IMF disbursements to about US$1.19 billion. PNG met all but one quantitative performance criterion for end-June, Reuters reported.
The same report carried the IMF’s forecast that real GDP growth would slow to 3.1% in 2026 from 6.2% in 2025, with headline inflation rising to 4.8%.
The full-year target is unchanged at K1.608 billion, or 1.0% of GDP, according to the supplementary budget. The first six months ran 49% past that figure on their own. To land on target, the second half has to produce a surplus of roughly K792 million.
Oil money on both sides of the ledger
Ling-Stuckey told Parliament that Minerals and Petroleum Tax would beat its budget estimate by more than K3 billion, at least twice his own subsidy estimate.
The supplementary budget lifted revenue and spending by K1.33 billion each, taking total 2026 expenditure to K32.245 billion.
The speech set expected Kumul dividends at a minimum of K1,666.7 million against an offer from the state oil and gas company of K650 million. The ask is about 2.6 times the offer, a difference of K1,016.7 million.
Brendan Rynne, a senior economist at KPMG Australia, told the Business Advantage PNG Investment Conference in August that because PNG is a net hydrocarbon exporter, its fuel subsidies had mitigated any negative spillover into the economy, Business Advantage PNG reported.
Westpac economists Shamal Chand and Justin Smirk wrote on 18 September that the supplementary measures were largely funded by stronger revenue rather than new borrowing. They named a “very strong” El Niño as a key risk to the outlook.
What 2027 already owes
The supplementary budget added K150 million for Electoral Commission preparations and more than K50 million for police and defence. Acting Electoral Commissioner Margaret Vagi has set a tentative polling window of 26 June to 9 July 2027, The National reported in February.
Treasury also set aside K500 million for a national El Niño response and K665 million for local allocations, K5 million for each of 89 districts and K10 million for each of 22 provinces. The combined K1.165 billion exceeds the entire fuel package by K55 million. Treasury’s speech said up to K300 million of it may come from the World Bank, contingent on a national emergency declaration.
Paul Barker, executive director of the Institute of National Affairs, told Business Advantage PNG the money “is certainly needed” to provide relief in rural areas and help villagers recover their food gardens.
Marape’s office said on 3 September that the government expects a balanced budget next year, and possibly a modest surplus, and that it will not borrow to fund the supplementary budget.
