Page 15 - IB January 2022

Outlook Outlook

political rallies will be a recipe for disaster,” he told Islands
Business.
Mergers
Last year, there were two key business mergers. One
involved one of PNG’s largest and longest established compa-
nies, Oil Search, with Santos; the other between Digicel and
Telstra.
Barker says the mergers should provide better access to
capital, upgrading links between fibre-optic cables and na-
Michael Kabuni Paul Barker
tional networks and further rolling out 4G across the country.
But the proposed new levy of K190m (US$54m) for banks
Revenue and K95m (US$27m) for telcos—part of a strategy designed to
Tax revenue is projected to grow by 11.2%, with other rev- ensure PNG is debt-free in 13 years—is likely to impact inves-
enue and grants also up massively at 48.8%. These expected tor confidence and sentiment in PNG, and amongst consumers
increases are driven by higher commodity prices through the and superannuation members, says KPMG.
resumption of Porgera, and income from Simberi and Ok Tedi
mines, strong domestic economic growth and election-related Debt
spending. There is much concern over PNG’s growing level of public
The real concern is that the resumption of major mines will debt to GDP, Barker points out.
take longer than projected, and that COVID-19 will have a Government debt is expected to increase to 51.9% of GDP
more severe than expected impact. this year, way above the legal limit of 45% of GDP. A shortfall
Australia continues to be the provider of largest share of of K6612.8 million (US$18m) will be financed through more
grants at K1b, followed by the EU, China and the UN. borrowings.
A positive aspect over the past few years has been the ac-
Election cess to relatively low interest international loans, replacing
An election is due between April and July and will be a test costlier international commercial borrowing.
for the provinces to contain the spread of COVID-19, accord- “But the high level of domestic debt and interest rates,
ing to Michael Kabuni, policy analyst and PhD Candidate at must be restrained, as debt servicing costs have been increas-
the Australian National University, Canberra. ingly displacing other critical expenditure in the annual bud-
“PNG elections are known for drawing huge crowds during get and ultimately needs to be repaid,” he says.
rallies. It will be very difficult to maintain any sort of social
distancing or enforce restrictions during the elections. With editor@islandsbusiness.com
the ease at which Omicron is transmitted, huge crowds at

JUGGLING ACT

Continued from page 13 been in a State of Emergency ever since.
2022 will be the year for Solomon Islanders to implement
1000 people would lose their jobs as a result. “As a result, their response plans to tackle COVID-19 while ensuring they
the government is expected to lose around 31% of its monthly are able to put food on the table for their families and that
revenue or a net loss of around SI$80 million over the next their children have good education in a stringent environ-
three months,” it stated. ment. While other Pacific Island countries with COVID-19 cases
While the response to COVID-19 remains a priority, other are moving on, now is the time to see how the many Standard
important areas of work for 2022 include the upgrading of the Operating Procedures (SOPs) imposed by the Solomon Islands
international and domestic airports in Honiara, road upgrading government will see this country through this pandemic.
in Honiara, and other infrastructure projects for the prov- While the first half of 2022 will be challenging indeed,
inces. hopefully towards the second half of this year, the country
The spread of COVID-19 in the community has greatly will be able to find its footing and adjust properly to this pan-
reshaped the outlook for Solomon Islands for 2022. Businesses demic. The government really needs to be proactive and more
who have prepared for this will be able to manoeuvre around strategic in how they implement their work and where they
this health crisis. Unlike Fiji and other Pacific Island countries will prioritise their spending.
with ongoing community transmission, Solomon Islands has
had two years to prepare for this. The country’s first State of editor@islandsbusiness.com
Emergency declaration was in March 2020 and the country has
Islands Business, January 2022 15