The economy of Papua New Guinea (PNG) is largely underdeveloped with the vast majority of the population living below the poverty line.

As a result, its major cities like Port Moresby and Lae have received increased international investor attention, giving rise to an unprecedented building boom [25] to exploit the opportunities presented by the country's rise as a regional economic leader in the South Pacific region.

This is well supported by its strategic location as a gateway from the Pacific to Asia, as well as its comparatively huge landmass and demographic profile (almost 7 times that of the rest of the smaller Pacific Island nations) The International Monetary Fund has reported[26] that despite PNG's poverty, it is richly endowed with natural resources, but exploitation has been hampered by the rugged terrain and the high cost of developing infrastructure.

Budgetary support from Australia and development aid under World Bank auspices continue to sustain the economy.

[30] According to the Investment Promotion Authority of Papua New Guinea the major economic sectors are agriculture and livestock, forestry, mining and petroleum, tourism and hospitality, fisheries and marine resources, manufacturing, retailing and wholesaling, building and construction, transport and telecommunications, and finance and business trade.

[24] The economy generally can be separated into subsistence and market sectors, although the distinction is blurred by smallholder cash cropping of coffee, cocoa, and copra.

Copper and gold mines are currently in production at Porgera, Ok Tedi, Misima, Lihir, Simberi[32] and Hidden Valley.

[34] New nickel, copper and gold projects have been identified and are awaiting a rise in commodity prices to begin development.

[35] A consortium led by Chevron is producing and exporting oil from the Southern Highlands Province of Papua New Guinea.

Also, PPL operates the small Gazelle Peninsula Grid powered mainly by a 10 MW run-of-river hydro plant.

PNG Power Limited (PPL) is a vertically integrated utility responsible for generation, transmission, distribution and retailing of electricity throughout Papua New Guinea.

A study by Bloomberg New Energy Finance ranked PNG in the top 10 for potential renewable resources, with about 2.5 GW of these but only 2% of it exploited.

[51] Consultants to PNG Power have conducted feasibility studies for the Naoro Brown hydroelectricity Project which would supply up to 80MW of electricity to the Port Moresby grid.

The capital, Port Moresby, is not linked by road to any of the other major towns and many highland villages can only be reached by light aircraft or on foot.

It is also in charge of regulating banking and other financial services and manages the gold, foreign exchange and any other international reserves of Papua New Guinea.

In 2013, BPNG made a Maya Declaration Commitment[54] to create an enabling environment for building an inclusive financial sector in Papua New Guinea.

[57] Budgetary support, which has been provided in decreasing amounts since independence, was phased out in 2000, with aid concentrated on project development.

Economic activity decreased in most sectors; imports of all kinds shrunk; and inflation, which had been over 21% in 1998, slowed to an estimated annual rate of 8% in 1999.

Citing the previous government's failure to successfully negotiate acceptable commercial loans or bond sales to cover its budget deficit, the government formed by Sir Mekere Morauta in July 1999 successfully requested emergency assistance from the International Monetary Fund and the World Bank.