WITH a week to go before the polls, the
Central Bank this week gave a glowing report on the performance of the
economy, something which the Somare Government is likely to seize upon
in the final week of campaign to try to convince voters they should be
returned to power.
But the bank has also warned the Government against excessive spending
relating to the elections which could undo all the gains.
In the March Quarterly Economic Bulletin released this week, Central
Bank governor Wilson Kamit said indicators available to the bank showed
that economic activity increased in the first quarter of this year,
supported by stable macro-economic conditions.
Mr Kamit said formal employment in all sectors of the economy rose, as
credit to the private sector grew as a result of more business
investment.
He said the Government recorded a budget surplus reflecting strong
corporate profits and high income tax revenues.
But he warned that while macroeconomic conditions have generally
remained favorable, the Government should maintain a sound and prudent
fiscal management during the election period.
“The Bank of PNG is concerned about the increase in Government spending
in the face of the current unfavourable external developments, which is
already impacting adversely on prices.
“It is in the best interest of the nation that the government maintains
macroeconomic stability during the election period,” Mr Kamit said.
The Central Bank caution about expenditure comes at a time when various
organisations including the Ombudsman Commission have raised concern
about massive payments to Members of Parliament relating to projects in
their electorate in this election period.
The commission said it was worried how the expenditure of about K900
million reportedly released to the MPs would be acquitted or accounted
for in a short period, and particularly when some of the MPs may not
return to Parliament after the elections.
