Socio-Economic ImpAct ASSESSmEnt Of CoViD-19 On PApuA NEw GuinEA

ExecutiveSummaryCOVID-19 and itsSocio-Economic Impacton Papua New GuineaThe COVID-19 pandemic and its ensuing globalsocio-economic crisis has not spared PapuaNew Guinea. Global impacts have cascadedonto Papua New Guinea, and the initial impactshave been significant. Papua New Guineahas been hit hard at the macro, sectoral,household, and firm levels. This impact hasbeen highlighted in UNDP’s national survey of9,000 respondents covering 6,000 householdsand 3,000 firms across Papua New Guinea. Anational representative sample, it covers all 89districts of the country’s 22 provinces, includingthe Autonomous Region of Bougainville.This SEIA of COVID-19 on Papua New Guineareport assesses the impacts and provides theGovernment, its partners and decision makerswith policy and programme options that cansupport an effective and sustainable recovery.It assessed the critical impacts on vulnerablegroups focusing on households and micro smalland medium-sized enterprises (MSMEs). TheSEIA is presented in 3 parts: context, impact, andpolicy recommendations.18The SEIA proposes recommendations on howto ‘build back better’, i.e. it provides options forsupporting a sustainable and green recoverythat is more inclusive and that addresses theneeds of the most vulnerable segments of thepopulation.1Papua New Guinea confirmed its first COVID-19case on 20 March 2020. The Government’sdecisive action to contain the spread of thevirus has saved lives and resources. The mainmeasures to contain the spread of the virus wasthe State of Emergency (SOE) and the associatedNational Emergency Orders (NEOs) that were inplace from 22 March 2020 untill 16 June 2020.After the SOE expired, a National PandemicAct was passed that allows the Government tocontinue to implement necessary actions andrestrictions to contain and manage the spreadof COVID-19.The PGK 5.6 billion (US 1.2 billion) EconomicStimulus Package (ESP) announced in Juneincludes a PGK600 million (USD 170 million), forMSME support. The ESP is being implementedby the Government to address the impact ofCOVID-19. The ESP allocated for PPE, healthcaresystems, protective measures, awareness,training, loan repayments, jobs, and businessactivities. Funding of the ESP was mobilized bythe Government from domestic resources andsupported by bilateral and multilateral partners.The SEIA is a rapid assessment and hence not an analytical evaluation as we are living through the COVID-19 crisis and deeperanalysis and evaluation can only be better made after the crisis.Socio-Economic Impact Assessment of COVID-19 on Papua New Guinea

The initial impacts are being felt at the macro,sector, household, and firm levels. While impactsvaried, almost everyone experienced someimpact from the measures taken. The impact onpeople is unparalleled, but also uneven, as it hassignificantly transformed lives and livelihoods.The impact on vulnerable groups was severe.Main Findings of theSEIA ReportAt the macro level, growth, trade, investment,and employment have been heavily affected.With continuous disruption, coupled with lowglobal oil and commodity prices, growth isenvisaged to post a contraction of -1.8% for2020 compared to the 6.2% of 2019.2Prices for food and services surged by 1.6% toaggravate the already difficult affordabilityconditions of the poor and the vulnerable.Inflation spiked by 5% before settling back to3%. This rise was largely due to the increase inprices of food items associated with the sharpdrop in agricultural output resulting from theSoE. Prices for non-food products and servicesincreased by 2.1% and 1.8% respectively. Thisprice hike was associated with the panic buyingbefore the SoE.3Few sectors have been spared. Travel andtourism are the worst affected with a declineof about 97% of business. The Services sector,as well as labor-intensive manufacturing andindustry, saw 90% layoffs. Manufacturingwitnessed an 18% decline as major companiessuspended or significantly reduced operationsin several manufacturing facilities/factories. Theentertainment industry and sporting events sawa 95% decline in business. Agriculture reporteda 12% sharp fall in production and fresh foodmarkets, food supply chains, seed supply,livestock, and agribusiness.Travel restrictions, one of the measures thatinduced the most profound impact, accountedfor 54% of the impact on the incomes ofhouseholds. The SEIA survey results showedthat the income of 80% of households wasadversely affected. There was also a 38% declinein household expenditures.Household debt servicing has been difficult.Of the 72% of the respondents that reportedservicing some form of debt, more than 50%have been severely affected due to the adverseimpact of the socio-economic crisis on theirincomes.Quantity of consumption of essential fooditems of households declined by 15% in half ofthe 6,000 households surveyed. Impact on theBy June 2020, more than 7,000 people in the quality of food intake was also affected.public sector have lost their jobs. The number ismuch higher if we account for the private sector. Impact on the employment of heads ofAbout 35% job loss for households and about households was severe, with 31% losing theirone-third of firms as well as for Government jobs. This was a major contributing factor to thedepartments/agencies stemming from the laying personal challenges faced by many respondentsof the survey, which included reduced incomeoff of contractual, casual and outsourced staff.opportunities, security concerns, travelGovernment revenues shrunk by 10% compared expenses, managing children at home, mentalwith previous forecasts and this has led to stress and family and sexual violence.reductions in Government capital spending.This may limit the Government to effectivelyfund public investment programmes.23Bank of PNG Quarterly Economic Bulletin, June 2020.Prices for some items such as buai was artificially inflated by 100% from the normal street value of K1.00 to K10.00 per nutduring the SoE. These artificially induced price hikes were contained by the swift interventions of the ICCC.United Nations Development Programme in Papua New Guinea9

The assistance offered by Government,churches, NGOs, employers, or other sourceswas slow in its delivery and often unable toreach the segments of the population most inneed. Established mechanisms of support werenot able to cope with the need to rapidly deploy.Over 90% of respondents reported receiving noassistance from any formal sources, with only10% of the respondents receiving some form ofsupport.Policy options for theGovernment and its PartnersThe Government should take the lead , and costed economic and socialpolicies for an inclusive and green recovery thatpromotes resilient and sustainable development.Government policies and programmes shouldaim to:For any future support, households proposedthe below four key measures for the Government and development partners to consider: Reductions in income and GST taxes, as well as income tax holidays. Protect the most vulnerable.Enhance the business environment.Diversifying the nation’s economic base. Financial and other support for MSMEs. Specific measures to assist workers andemployment.To achieve these, the Government shouldconsider: A range of social protection measures. MSMEs had businesses abruptly disruptedby the SOE measures with 75% of firmsseverely affected due to the lockdown, followed by a ban on operations (32%), and flight cancellations (12%). Other issuesincluded a decline in Government spendingon capital projects that caused several contracts to be put on hold.Registered businesses were more impactedwith over 40%, than non-registered businesses.Of these, 30% were severely impacted andhad to lay off staff and temporarily ceaseoperations. The survey results showed that 48%of wholesale/retail firms, 20% of agriculturefirms, 10% of tourism/hospitality firms and 8%of construction firms were severely impactedMost businesses were not supported duringCOVID-19. The results of the national surveyshowed that 81% required support, while only13% received some sort of support in the formof policy advice or awareness and financialcounselling. The ESP could be better targetedand rolled out to the intended beneficiariesto access. Over 52% of firms reported that thesupport offered through the ESP implementedby the Government had not yet reached them.10Improve living standards.Building a socio-economic recoverycoalition with its partners to effectively‘build back better’.Consolidate resources.Building on ongoing activities that havesupportedimproveddevelopmentoutcomes.Assess, design, cost and implementprograms for the immediate, medium andlonger term that support effective andsustainable socio-economic recovery.Immediate term responses could include directassistance to vulnerable households, employersupport programmes and supporting thecontinuity of business cash flow.To ‘build back better’ over the medium to longterm, Government policy options should include: Strengthening social protection systems. Sustaining firms, especially the MSMEs, andsupporting them to expand and maintainprofitability.Socio-Economic Impact Assessment of COVID-19 on Papua New Guinea

Investing in human capital developmentand technological advancement, especiallywhen it comes to green technologies andrenewables. Increasing the fiscal space and diversifyingPNG’s economic base with an enablingenvironment, especially for green andsustainable economic growth.United Nations Responseand Recovery SupportThe United Nations in Papua New Guinea isin the forefront of the response efforts. TheUN is one of the lead partners on the healthresponse, but also provides coordination,emergency, humanitarian, and longer-termrecovery support. The UN Country Team inPapua New Guinea is engaged across all pillarsof the response, i.e. humanitarian, health, aswell as socio-economic recovery, with thepresent assessment being the cornerstone forthe development of an integrated UN SocioEconomic Recovery Plan.The United Nations will continue to work withGovernment, private sector, developmentpartners and civil society to support nationalresponse and recovery efforts in the short,medium and long-term. Globally, the UnitedNations has identified five pillars to assistcountries to recover from the impact of theCOVID-19 pandemic. The United Nations iscurrently delivering a USD 62 million programmein Papua New Guinea in direct responseto COVID-19. This includes the emergencyprocurement of Personal Protective Equipment(PPE) and medical equipment, the provision ofcritical water, sanitation and hygiene supplies,COVID-19 awareness materials, engaging withCivil Society Organizations on disaster riskreduction, deploying technical expertise to assistnational coordination efforts, and measures tosupport and protect victims of gender-basedand family and sexual violence. The responsealso includes the current assessment and itspolicy options.UNICEF Representative, David Mcloughlin (left), Minister for Health, Jelta Wongand UNDP Resident Representative, Dirk Wagener on hand to witness the arrivalof the ventilators.United Nations Development Programme in Papua New Guinea 11

Part 1:Context andBackgroundOverviewpopulation. The impact is being felt and isunfolding as COVID-19 continues to spreadglobally. At the time of writing (4 August 2020),The disease caused by the novel coronavirus the pandemic has spread to 213 countries andwas officially named Coronavirus Disease infected more than 18 million people causing2019 (COVID-19) and declared a global close to 700,000 deaths, with shifting epicenterspandemic by the World Health Organization across the globe, from Asia, to Europe, Northon 11 March 2020. Countries around the world and South America. The Pacific remains highlyimmediately took precautionary measures based vulnerable due to its relative isolation and lowon WHO recommendations. Countries continue coping capacity of its health systems.to implement entry screening requirements forarriving air passengers and flight suspensions The initial impacts are being felt at the macro,and/or restrictions remain in place in most sectoral, household, and firm levels. At thecountries. Many countries (including Papua New macro level, the disruption to the global supplyGuinea) have also repatriated their stranded chain has resulted in the loss of business andcitizens from all over the world. Most countries employment and growth outlook. A recent surveywent beyond closing borders to include an conducted by the Institute for Supply Chainarray of domestic restrictions on movements Management reported that 96% of companies(closure of schools and on-essential businesses, reported disruption in the supply chain due torestaurants, limitations on retail businesses, COVID-19 related transportation restrictions.4domestic travel, and trade restrictions, social Commodity exporting countries like PNGdistancing measures, and restrictions on public experienced a double shock emanating fromevents/gatherings, stay at home orders, as well the fast deteriorating global economic situation,as curtailment of public transportation). These which led to the sharp falls in the commodityactions within countries and their synchronized prices. At the sector level, transportation, tourism,nature across countries disrupted the global and hospitality industries were heavily affected. Atthe household level, the vulnerable and poor havesupply chains as much as travel restrictions.been severely affected with loses to income, andThe impact of COVID-19 is felt across the globe deterioration in their overall livelihoods and wellby almost all segments of society albeit the being. At the firm level, many MSMEs have beenimpact is distributed unevenly. The impact on knocked out of business. Impact on individualsthe global population is unparalleled as it has have also been significant, including substancesignificantly transformed lives and livelihoods, abuse, violence against women and children.especially of the vulnerable segments of the412See https://www.ioscm.com/about/Socio-Economic Impact Assessment of COVID-19 on Papua New Guinea

COVID-19 in PNG andResponse Measures Takenby Government5PNG confirmed the first COVID-19 case inLae on 20 March 2020. The index patient was aforeign national who was identified, quarantined,treated and repatriated. Another 7 cases werediagnosed on 16 April 2020 and 25 new cases atthe end of July 2020. All were quarantined, treated,and discharged. Those associated with the indexpatients were also identified, quarantined, testedand discharged if not infected. Testing of personswho may have contracted the virus has been ongoing at designated health centres since midMarch 2020. At the time of writing (3 Aug 2020),111 persons had tested positive for COVID-19 sinceMarch, with 2 officially reported death on 31 July.The Government’s immediate response madea remarkable difference. Faced with starkchoices, the Government recognized COVID-19as a significant public health and socio-economicthreat early and made swift choices to addressand reduce them. The priority on protecting liveshas thus far largely contained the spread of thevirus and prevented major impacts on Papua NewGuinea’s healthcare system.6Restrictions on movement and entry pointshelped contain the spread of the virus. TheGovernment declared an initial COVID-19 SOEon 22 March 2020 for 14 days. The SOE and theassociated National Emergency Orders (NEOs)imposed the closure of schools, restricted allflights and shipping and stopped all forms ofpublic transportation. During the lockdown,only essential staff could attend offices and only5678essential shops remained open. Non-essentialstaff worked from home or were laid-off. On 7 April2020, the SOE was extended for 2 months from theinitial 14 days to 2 June, then further extended to16 June 2020. After several weeks (on 1 May 2020)domestic flights resumed for selected destinations,and schools and business resumed operations onApril 27. These measures were reviewed as newcases were confirmed in June. ANational PandemicAct was passed by Parliament that enables theGovernment to establish measures necessary tomanage the pandemic beyond the end of theSOE, including domestic and international travel/movement restrictions, transport restrictions,social distancing measures, etc. A set of guidelinescalled th

SRH Sexual and Reproductive Health UNAIDS Joint United Nations Programme on HIV/AIDS . 8 Socio-Economic impAct ASSESSmEnt of coViD-19 on ApuA p nEw GuinEA COVID-19 and its Socio-Economic Impact . impact, and policy recommendations. The SEIA proposes recommendations on how to 'build back better', i.e. it provides options for