SYDNEY, Aug. 19 (Xinhua) -- For every country, COVID-19 has come at some cost to the economic and social fabric. However, for those nations already under pressure, the impact threatens to be particularly devastating and long lasting.
Papua New Guinea (PNG) is among the most underdeveloped nations and now also leads the region in COVID-19 infections in the Pacific island countries, this week surpassing 300 positive cases, primarily in the capital of Port Moresby.
While PNG's leadership was swift in reacting to the outbreak, and effectively avoided a sudden outbreak, this month Prime Minister James Marape moved not to renew a two-week lockdown, instead implementing softer social distancing restrictions allowing markets, schools and restaurants to reopen.
The country now faces dual health and economic repercussions with limited options to combat either.
Lecturer in economics at the University of PNG, Maholopa Laveil, told Xinhua on Wednesday some had described the situation as a "crisis on top of a crisis."
"I think the government did respond well in the beginning, keeping case numbers down until a month ago, but just because the options to the government fiscally are limited they just couldn't deal with a lockdown," Laveil said.
Job losses, estimated by the World Bank to be as high as 25 percent of the existing workforce, have added to the pressure for everyday Papua New Guineans, particularly those in urban areas who are less able to fall back on subsistence farming, which has been the case in other parts of the country.
"The average worker has about six dependents. So when you lose the income earner in your household, it's very hard, especially for the urban poor," Laveil said.
"The urban poor are more reliant on cash, so when travel restrictions were imposed and aggregate demand was suppressed, people weren't making as much money in the informal economy, selling agricultural produce and other items."
Government supported relief measures such as tax deferrals and loan repayment holidays had only a limited effect and leaders' capacity to offer more assistance was severely limited by fiscal deficit and government loan limits.
Professor Stephen Howes, director of the Development Policy Centre (DPC) at the Australian National University told an online seminar on Wednesday that Papua New Guinea went into the pandemic with the largest fiscal deficit of Pacific Island nations.
"In the case of PNG, our own projection is that they're not going to be able to borrow any more than was originally budgeted for in their very large deficit," Howes said.
"So there's a limit to their capacity to fund additional COVID-19 spending."
In April the government announced an economic stimulus worth 5.7 billion Kina (1.5 billion U.S. dollars) to combat the economic effects of COVID-19, targeted at supporting agricultural operations and other business ventures.
However, Laveil said that the money appears to have been slow to reach the hands of the public and small businesses.
Compounding existing issues has been a hit to PNG's vital exports, notably Liquid Natural Gas (LNG), the global price of which plunged as a result of COVID-19.
While the price of PNG's other major export, gold has reached an all time high, recently virus outbreaks in the country's Western province forced the closure of major mining operations of the precious metal.
According to Laveil, resulting job losses have been widespread across PNG's resource sector. Energy producer, Oil Search drastically scaled back its operations in PNG in response to a steep fall in the oil and gas prices, cutting 550 full-time workers from the company's books.
Earlier, following a dispute with the government, the operators of Porgera (JV) mine laid off 2,650 locals -- and after recently detecting cases of COVID-19 suspended mining operations.
"Obviously these companies are contracting, how much we don't know yet, but the tangible result is that workers have been laid off," Laveil said.
"Until commodity prices pick up, they're not going to be employed, so if on average, if you have six dependents then your whole family needs to look for an alternative means of income."
The World Bank estimates that roughly 37.5 percent of PNG's population lives below the poverty line, and with COVID-19 that number is expected to rise.
Chief Economist at Australia's Department of Foreign Affairs and Trade, Dr Jenny Gordon explained that countries which had high rates of poverty and underdeveloped social safety nets going into the pandemic were of particular concern.
"If you have a social protection system it's quite easy to expand that fairly rapidly, but if you don't have one in place it's quite challenging to actually get the funding out," Gordon said.
With a relatively high poverty rate, PNG may lack both the means and the method to support its most needy citizens through this difficult time, raising concerns over long term educational, health and social impacts.
The path forward for PNG is uncertain and remains heavily dependent on the rate of COVID-19 infections.
For now though, Laveil said that life in capital Port Moresby has returned to relatively normal, or what the government refers to as the "new normal" under COVID-19, or "niupela pasin." Enditem
