A team from the International Monetary Fund, which has just completed a visit to Papua New Guinea, says higher taxes and cuts in spending will be needed to overcome the country's deficit.
The team, in an initial report, says the 100-Day Economic Stimulus Plan is a welcome initiative and will help cut the 2017 fiscal deficit significantly but it will take until 2020 to achieve a balanced budget.
The IMF also said PNG had to increase its exchange rate flexibility.
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It said foreign exchange shortages were delaying economic recover and was undermining the country's competitiveness.
The IMF said there would have to be higher tax, cuts to government programmes and more effort to ensure tax compliance.
It said in terms of cuts, rapid action was needed to cut ballooning public sector wage costs but care needed to be taken to ensure the delivery of basic health, education, and public security services.