TREASURY and Finance Minister Patrick Pruaitch is to unveil a budget of about K8 billion today, a record outlay in another year of high oil and commodity prices.
The budget, the first full budget for Minister Pruaitch, comes after a general election in which the Government was commended for not blowing its spending, as is the practice in past general elections.
The bulk of the budget is expected to target development projects in rural areas.
In a supplementary budget after the elections, the Government allocated K4 million (K356 million in total) for districts.
In the 2008 budget, it is expected that K10 million is expected to be allocated for each districts, or a total of K890 million.
But these allocations have been criticised by various sectors worried about funding misuse.
The International Monetary Fund (IMF), which had a team recently in Port Moresby for consultations with Treasurer Pruaitch, expressed concern about what it sees as a “loosening of fiscal policy in the 2007 Supplementary Budget”.
The IMF team, led by Deputy Division chief in the Asia Pacific Department Susan Creane, said the large allocations to the districts raised risks for the PNG economy, for sustainable growth and inflation, because spending capacity was weak in the districts.
Treasurer Pruaitch has not responded to these concerns, but is expected to go ahead and announce the K10 million each for the districts next year.
For the workers in both the private and public sector, a reduction in income tax has been promised.
The Government sees this as a better option than to give minimal salary increases without altering the taxes, virtually leaving the workers to take home their pay unchanged.
It has been pointed out to the Government that mineral revenue will decline from its peak in this year, and therefore the large, but temporary fiscal surpluses should be managed well.