Page 23 - IB Jan 2018

Budget Economy IMF wants Fiji to free up land P25
Rugby Rugby player in kidney crisis P33

FISHERIRES AVIATION
PNG spending cutback

More money for exchange imbalance. about the current bleak fiscal outlook im-
Prime Minister Peter O’Neill was upbeat
Deloitte said in pillar one the PNG Gov-
agriculture, SMEs ernment is not introducing new taxes, proving. O’Neill said the global upswing
though some existing taxes are being
in commodity prices boded well for his
adjusted. There is instead increased at-
country.
“Oil is now trading close to sixty dol-
in 2018 Budget tention on improved tax compliance lars per barrel; gold and copper are also
through the Internal Revenue Commis-
sion, with a particular focus on improved increasing; coffee and all the other com-
employer registrations targeting personal modity prices are also improving. So what
and corporate income (forming the largest we expect is a very stable environment
component of tax revenue at 60 per cent). over the coming years,” said O’Neill.
Tax reform is being rolled out in line with He said his government was looking to
the government’s medium term revenue re-organise the structure of PNG’s debt
strategy. and improve revenue collections.
by Sam Vulum Deloitte said there is also a strong focus Meanwhile, a World Bank report said
on recovering dividends from State Owned a rebounding agricultural sector and im-
STRUGGLING with cash flow problems Enterprises (SOEs), with fisheries ex- proving efficiency in liquefied natural gas
and high debt burden, the Papua New pected to contribute the largest component. (LNG) production are recent highlights of
Guinea government through its 2018 Deloitte said in pillar two, the govern- the PNG economy.
budget has announced new fiscal strategy ment has realised that total expenditure Nonetheless, growth slowed in 2017
to stabilise debts and recover from revenue exceeded forecast in the 2017 Supplemen- owing to necessary public spending ad-
collapse. tary Budget by a considerable 14.5%. Ac- justments, coupled with foreign currency
The government wants to shift its debt cordingly, the 2018 Budget seeks to limit shortages.
from commercial to concessional loans to and reverse the upward trend in recurrent The Papua New Guinea Economic Up-
reduce its high interest costs and hopes expenditure by primarily halting the rise date, the first in a new twice-yearly series
the shift will help solve PNG’s longstand- in personnel emoluments expenditure and from the World Bank, was launched in De-
ing problems with foreign exchange. It placing stricter controls on utilities and cember in Port Moresby and aims to pro-
has again promised to pursue a US dollar office rentals. vide ongoing analysis of PNG’s economy.
sovereign bond issue, after difficulty find- “As stated in the 2018 Budget economic “The government has initiated efforts
ing any market appetite over the previous and development policy document, im- to stimulate the economy and inclusive
two years. proved public sector efficiency is sought growth through its 100-Day Economic
It has slashed spending over the previ- by amalgamating government agencies; Stimulus Plan. The 2018 Budget, in
ous two years, but is now introducing a 1 and reviewing the structure of the Ku- conjunction with the medium-term fiscal
billion kina (US$311m) “stimulus pack- mul Consolidation framework (covering and revenue strategies, provides further
age” with a US$31 million State Equity Kumul Consolidated Holdings, Kumul evidence of the government’s intent to
Fund to partner with private investors on Mineral Holdings and Kumul Petroleum strengthen the fiscal framework,” said
agriculture projects. Holdings) to ensure more prudent fiscal Michel Kerf, Country Director for Papua
These measures it announced in the management. New Guinea & Pacific Islands.
budget which it hopes to achieve under “Additionally, Treasurer Charles Abel “Commitments to reinforce resilience
three pillars. when handing down the budget said in to fluctuating commodity prices by dis-
As highlighted in a budget analysis by relation to the State Owned Enterprises entangling government spending from
Deloitte, the 2018 Budget is ambitious and (SOE) that there is legislation before volatile resource revenues, and plans to
looks to implement a medium term fiscal parliament seeking to regularly capture establish the sovereign wealth fund are
strategy, centred on the following pillars: and sweep funds held by the SOE’s into particularly encouraging. Strong efforts
• Halting the declining revenue in the short consolidated government revenue and must be made to contain wage bill costs,
term, with a trend to higher sustained then manage these funds centrally,” De- which are straining funds available for key
income over the medium term; loitte said. public services,” he added.
• Reducing recurrent expenditure, rede- Deloitte said under the third pillar, the He said government revenue in the first
ploying those funds for productive capital 2018 Budget aims to minimise funds half of 2017 grew 6.7 percent, less than
expenditure (with a focus on diversifica- held with commercial banks that are then the 15 per cent expected in the budget,
tion of the economic base, especially into invested in government inscribed stock; while spending has been higher than
agriculture) and improve efficiency of the raise a US dollar bond and generally shift planned, necessitating the cuts to capital
public sector; and the mix of debt from domestic to foreign spending announced in the 2017 Supple-
• Improving debt management, cost of currency; and mandate the use of local mentary Budget..
financing, and extinguishing the foreign currency. r vulumsam@gmail.com

Islands Business, January 2018 23