The partnership between the EU and Papua New Guinea, embedded in the EU strategy for Cooperation in the Indo-Pacific, roots on the Cotonou agreement and its successor, the Samoa Agreement, provisionally applied since 1^st January 2024. The Samoa Agreement sets the framework for political dialogue between the EU and Papua New Guinea, trade and development cooperation, including respect for democracy and human rights principles. Political cooperation is also aligned with the Global Strategy for the EU’s Foreign and Security Policy, the Global Gateway Strategy, and with multilateral agreements such as the Paris Agreement and the Convention on Biological Diversity.

Political partnership is nourished by dialogue on topics of mutual concern, taking place in different fora and settings. The fifth High-Level Political Dialogue between Papua New Guinea and the European Union was held on 27 February 2023 in Port Moresby, covering issues such as peace and security in our regions, democracy, good governance and human rights, environment and climate change, supporting the multilateralism and rule-based order, trade and investment aspects, energy security and development partnership agenda.

The EU’s ultimate goal is to build stronger political relations with Papua New Guinea, and the entire Pacific region, while supporting good governance and sustainable development.

With a rapidly growing population of approximately 12.5 million and a GDP of USD 32 billion, Papua New Guinea is by far the largest economy in the Pacific region. Papua New Guinea's economy is heavily dependent on natural resources, with mining, oil, and gas making up over 80% of export revenue. Agriculture also plays a crucial role, contributing a third of GDP and employing nearly 80% of the population. Key exports include coffee, cocoa, palm oil, and copra. After a decade of fast growth fuelled by exports of minerals and natural gas that brought Papua New Guinea into the category of lower middle-income country, Papua New Guinea’s economic growth has been slower from 2016 to 2024. The PNG Vision 2050 and Strategy Plan 2010-2030 aim to both reduce the country’s excessive reliance on mineral resources and support the diversification of the economy thus operating a paradigm shift from brown to green economy.

To diversify its economy, Papua New Guinea was the first country in the region to sign in 2009 the Economic Partnership Agreement (EPA) with the EU, granting duty- and quota-free access to the EU market. The trade balance has been positive for Papua New Guinea over the last decade. The top 3 products exported to the EU are : Animal and vegetable fats and oils; Foodstuffs, beverages and tobacco; and Mineral products. The EU is the 4^th export destination for goods from Papua New Guinea. The EU is notably the main export destination of its processed fish.

The European Union had put in place the EU-PNG Trade Related Assistance Programme (Phase 2) in 2014 – 2019 to increase Papua New Guinea’s capacities to tap on the opportunities of the EPA and benefit from trade & investment with Europe and the rest of the world. Under this programme, Papua New Guinea developed its first National Trade Policy, which has led to the establishment of the National Trade Office. The EU continues to support the implementation of the EU-Pacific EPA  through the Pacific Regional Integration Support (PRISE) Programme , worth 37 million euros, ​and its SAFE, IMPACT and SPIRIT Projects.

To further develop and unleash the productive and employment potential of the rural economy, the EU is increasing employment and trade opportunities for rural and costal entrepreneurs under its EU Support to Rural Entrepreneurship, Investment and Trade (EU STREIT) PNG Programme.

Papua New Guinea has received over EUR 476 million (Kina 2 billion) in the form of development support from the European Union through the European Development Fund (EDF) between 1987 and 2020.

The period between 2014 and 2020 marked the final programme under the European Development Fund (11^th EDF) with a total funding of EUR 154 million (Kina 616 m). The focus was on three sectors:

• Rural Entrepreneurship and Investment & Trade
• Water, Sanitation and Hygiene
• Policy Reform and Good Governance and Complimentary Support

The period 2021-2027 is covered by the first Multi-annual Indicative Programme (MIP) and financed by the Global Europe financing Instrument, introduced in 2021. The MIP is fully aligned with Papua New Guinea’s Multi-Annual Development Plan IV (2023-2027) and also facilitates the implementation of ‘Connect PNG’ and the EU’s Global Gateway Strategy, through actions geared towards supporting sustainable infrastructure. Over EUR 177 million (Kina 757 m) of grant funding has been committed to Papua New Guinea under this framework for the period 2021-2027. The focus of the MIP programme is on three sectors:

• ‘Our Forest Our Future’, addressing the Forestry-Climate Change-Biodiversity (FCCB) nexus
• ‘Water is Life’: Water, Sanitation and Hygiene (WaSH) for Human Development
• ‘Transparent and accountable Governance’

Further support is been provided through dedicated thematic budget lines on relevant issues such as democracy, rule of law, gender based violence and support to non-state actors and community based organisations.

In 2020, the European Union assessed that PNG qualified to receive “Budgetary Support”, which is grant funding made available directly to the Treasury. The aim is to enhance fiscal space and allow implementation of relevant and credible policies, with a commonly agreed set of objectives to be achieved during the life of the support. This specific support targeted the Social Law & Order Sector (SLOS). Due to good progress made with this instrument, the EU gave internally the green light for the development of a second Budget Support programme for PNG which is expected to start in 2025 in cooperation with Papua New Guinean authorities.

For new infrastructure related projects, the EU is ‘blending’ grant funding with concessional loans from development banks such as the European Investment Bank (EIB) or the Asian Development Bank (ADB). In addition, the EU can provide guarantees for loans provided by development banks, increasing the concessionality of the financing for Papua New Guinea.

The European Union is thus using a large scope of implementation modalities to achieve the best results in its partnership with Papua New Guinea.

See relate program here: https://www.eeas.europa.eu/eeas/projects_en?s=150&f%5B0%5D=project_site%3APapua%20New%20Guinea

Global Gateway is the European strategy to boost smart, clean and secure connections in digital, energy and transport sectors, and to strengthen health, education and research systems across the world. Through a 'Team Europe approach', Global Gateway brings together the EU, its Member States and their financial and development institutions to mobilise the private sector to leverage investments promoting sustainable growth.

Between 2021 and 2027, Team Europe is mobilising up to €300 billion of investments for sustainable, transformational and high-quality projects, taking into account the needs of partner countries and ensuring lasting benefits for local communities. This allows EU’s partners to create resilient and sustainable societies and economies, but also create opportunities for the EU Member States’ private sector to invest and remain competitive, whilst ensuring the highest environmental and labour standards, as well as sound financial management.

Global Gateway offer in Papua New Guinea:

In Papua New Guinea, the EU is working on flagship initiatives regarding rural economic development, climate and energy and transport.

Country Flagship ‘Support to Rural Entrepreneurship, Investment and Trade (EU-STREIT)’

The EU ‘Support to Rural Entrepreneurship, Investment and Trade in Papua New Guinea’ (EU-STREIT PNG) programme is with a budget of EUR 81.3 million the largest grant-funded initiative of the EU in the country and in the Pacific, implemented by a consortium of UN agencies under the lead of the Food and Agriculture Organization (FAO). The programme aims to help improve the lives of the people from East Sepik and Sandaun provinces of Papua New Guinea, by focusing on increasing sustainable and inclusive economic development of rural areas through improved economic returns and opportunities from cocoa, vanilla and fishery value chains while strengthening and improving the efficiency of value chain enablers, including the business environment, and supporting sustainable, climate-proof transport and energy infrastructure development. Supported infrastructure development includes the installation of off-grid solar energy generation, clearing of waterways, rehabilitation of rural airstrips, and rehabilitation and maintenance of feeder roads.

Country Flagship ‘Upgrading of Rabaul's Green Port’

The ‘Upgrading of Rabaul’s Green Port’ is a blending project for a total of EUR 60.3 million with a grant from the EU and loans from the European Investment Bank (EIB) and the French Development Agency (AFD), including a requested EFSD+ guarantee for the EIB loan. The project will provide consultancy services for construction and project management, technical assistance, capacity building, and partially funding civil works investments. Civil works encompass the rehabilitation and enhancement of the two port wharves, a maintenance dredging operation, establishment of a site-wide stormwater drainage network and upgrades to the water supply and sanitation network the acquisition of new equipment, and enhancement of port’s operations with a focus on green port principles. This will ultimately contribute to territorial cohesion, inter-island connectivity, and the preservation of PNG’s natural heritage.