S&P says that the "stable" outlook reflects its assumptions that fiscal consolidation efforts and policies included in an International Monetary Fund programme would continue over the next year narrowing fiscal deficits and stabilising the country's debt burden.
The report, released last week said S&P could even lower the country's ratings over the next 12 months if consolidation efforts did not appear to be taking place, raising concerns about the country's rapidly rising debt levels and debt serviceability.
"We could raise our ratings if there were a strong track record of implementing fiscal reforms, thereby improving our view of PNG's fiscal and debt metrics, as well as a strong improvement in GDP (gross domestic product) growth.
"This is unlikely to occur over the next 12 months. Despite an estimated decline of 3.5% in real GDP in 2020, we expect a modest economic recovery of 1.7% in 2021.
"Buoyant agricultural output and commodity prices drove growth in 2021, and the reopening of resource plants shuttered during the pandemic will support resource-related growth.
"The promise of new resource-related projects in the medium term should improve the country's economic prospects."
The report said the pandemic had exacerbated structural fiscal challenges within PNG.
"Our sovereign ratings on PNG reflect structural constraints inherent in a low-income economy dependent on the mining industry and served by weak institutions.
"The PNG government aims to promote investment and address macroeconomic imbalances and economic diversification."