Foreign aid has been a defining feature of Papua New Guinea’s (PNG) post-independence experience. Since gaining self-governance in 1975, the country has received billions in aid from traditional development partners, particularly Australia, along with increasing contributions from China, the European Union, Japan, the United States, and a growing number of multilateral organisations. While this aid has provided crucial support in education, health, infrastructure, and governance reform, it has also left an indelible imprint on PNG’s political institutions, leadership behaviour, and strategic posture.
At its core, the foreign aid relationship between PNG and its donors has always been more than a question of development outcomes. It is a political relationship—one shaped by competing interests, dependency dynamics, and evolving geopolitical tensions in the Pacific. Over five decades, foreign aid has both stabilised and distorted PNG’s political landscape, simultaneously enabling state functions and entrenching patterns of elite capture, weak accountability, and political patronage.
In the immediate post-independence years, aid was framed as a transitional necessity. Australia, as the former colonial administrator, became PNG’s primary donor, contributing over half of PNG’s annual budget in the early 1980s. The rationale was straightforward: to support the nascent government in maintaining basic services while developing its institutional capacity. Australian aid, disbursed largely through budget support, was deeply embedded in PNG’s financial architecture. It paid teacher salaries, funded clinics, and supported provincial administrations.
But while this aid was vital in keeping the state afloat, it also created a dependency that undermined the incentive for political leaders to build a sustainable domestic revenue base. Budget support blurred the lines of accountability. Elected officials relied on donor funds to deliver services but were not directly answerable to citizens for how that money was spent. Over time, aid became an enabler of political expediency, allowing leaders to defer hard decisions on fiscal reform, taxation, or corruption.
By the 1990s, dissatisfaction with PNG’s governance performance led donors—particularly Australia—to recalibrate their approach. The introduction of project-based aid and technical assistance signalled a shift toward results-driven development. Rather than fund the government directly, donors began supporting specific programs in education, health, law and justice, and rural infrastructure. This created parallel systems of service delivery, often more efficient than government ministries but less accountable to PNG’s institutions. While some programs succeeded in improving short-term outcomes—such as immunisation campaigns or school construction—others struggled due to coordination failures, limited local ownership, and politicisation of aid flows.
One of the most consequential ways foreign aid has shaped PNG politics is through the cultivation of elite relationships. Donor governments, in seeking to deliver programs and secure influence, have often prioritised access to senior officials and political leaders. In doing so, they have sometimes reinforced the concentration of power in the executive, particularly around the Prime Minister’s office and key ministries. Aid, by flowing through these power centres, has enabled certain individuals and factions to consolidate political capital. Development funds have been used to reward allies, mobilise electoral support, or circumvent domestic checks and balances.
In some cases, donor-funded infrastructure projects have been co-opted into national political campaigns. Politicians have taken credit for donor-funded schools, roads, and health posts, often without acknowledging external support. This has allowed leaders to reinforce a narrative of personal delivery, fuelling PNG’s well-documented culture of “big man politics,” where elected representatives are judged by their ability to bring resources to their electorate rather than govern effectively at the national level.
The establishment of the District Services Improvement Program (DSIP) and its provincial counterpart, PSIP, further amplified this dynamic. Although these are domestically funded programs, their logic mirrors that of earlier donor models: channelling development funding directly to MPs to facilitate local service delivery. While DSIP has empowered MPs to respond to community needs, it has also entrenched patronage politics and undermined the role of national departments. Donors, by initially legitimising direct service delivery models outside of central government systems, helped normalise this fragmented and localised approach to development.
Geopolitically, the growing presence of China has added a new dimension to PNG’s aid politics. While Australia remains PNG’s largest bilateral donor, China has steadily expanded its footprint through concessional loans, infrastructure grants, and diplomatic engagement. Chinese-funded projects—from the National Convention Centre to major road and port upgrades—have become visible symbols of its influence. Unlike traditional donors, China generally avoids conditionalities related to governance or transparency, appealing to PNG leaders seeking swift results and fewer strings.
This aid rivalry has transformed PNG into a strategic battleground, with competing offers of assistance often tied to diplomatic alignment. The 2018 APEC Summit in Port Moresby, heavily supported by both China and Australia, was emblematic of this contest. More recently, the U.S. and its partners have re-engaged through the Indo-Pacific strategy, offering new development and security packages to counter Beijing’s rise.
For PNG, this influx of aid offers opportunities—but also risks. On one hand, increased donor competition has expanded the country’s options. Leaders can shop around for the best deals, diversify infrastructure financing, and extract more favourable terms. On the other hand, it can lead to fragmentation, duplication, and weakened long-term planning. PNG’s bureaucratic systems, already under strain, struggle to coordinate the growing array of donor projects, leading to inefficiencies and missed opportunities.
Moreover, the geopoliticisation of aid can distort national priorities. When donor funding is driven more by strategic rivalry than developmental need, sectors like defence, telecommunications, or maritime security receive disproportionate attention, even as basic education and rural health services remain underfunded. This is not to say that strategic investments are unwelcome, but they must not come at the expense of long-term, locally identified development goals.
Another major impact of aid on PNG politics lies in the governance and anti-corruption sector. Donors, particularly Australia, the EU, and multilateral institutions like the World Bank, have invested heavily in supporting the judiciary, the Ombudsman Commission, the Internal Revenue Commission, and civil society watchdogs. These investments have yielded important results—court systems have modernised, some anti-corruption cases have advanced, and public awareness of governance issues has grown.
However, the deeper political structures that sustain corruption remain resilient. Elite impunity, weak enforcement, and political interference continue to limit the effectiveness of reform. In some cases, aid-funded governance programs have become isolated technical exercises, detached from the political economy realities in which they operate. Without political backing from the top, institutional reforms rarely gain traction.
Foreign aid has also shaped political discourse and public expectations. Aid visibility—through branded billboards, donor logos, and public launches—has created a perception that development is something delivered from outside, not driven from within. This risks undermining the social contract between citizens and the state. If people believe that services are owed to them by donors rather than by their own government, it weakens democratic accountability.
Yet, it would be a mistake to view aid’s role in PNG politics solely in negative terms. Aid has enabled critical service delivery, prevented state collapse in moments of crisis, and supported countless Papua New Guineans through scholarships, training, and infrastructure. It has helped expand media freedom, supported elections, and fostered civil society activism. Many of the country’s best public servants were trained or mentored through donor programs. The challenge lies not in the presence of aid, but in how it is designed, delivered, and politicised.
As PNG enters its next fifty years, the role of aid must evolve. Donors must move away from fragmented projects and short-term fixes and instead support long-term nation-building rooted in local leadership and ownership. Aid needs to strengthen—not substitute—the state. This means investing in systems, not just outcomes; building institutions, not just roads. It also requires humility and patience. Development is not a linear process, and political transformation cannot be engineered from abroad.
Papua New Guinea, for its part, must assert greater leadership over the aid relationship. This includes strengthening its planning, coordination, and monitoring capacities, ensuring transparency in how aid is used, and resisting the temptation to politicise donor resources. A mature aid relationship is not one of dependency, but of partnership—one where the goals are mutually agreed, the strategies locally owned, and the outcomes nationally beneficial.
Foreign aid has helped shape PNG’s political landscape in profound ways—some enabling, others distorting. As the geopolitical stakes in the Pacific rise, the choices PNG makes about how it engages with aid—and how it uses it to serve its people—will determine not just its development trajectory, but the health of its democracy and the strength of its sovereignty.