* 2009 outlay K1.1b lower
 * No new taxes
 * Districts get extra K4m
 * GDP to grow at 6.2%*

 *Budget reports by Isaac Nicholas, Jason Som Kaut and Madeleine Arek. Photographs by EKAR KEAPU*

THE National Government yesterday handed down a K6.7 billion money plan for 2009 that seeks to promote sustained economic growth and targets rural areas amid the current world economic meltdown.
Treasurer Patrick Pruaitch handed down the Somare Government’s seventh consecutive budget since taking office in 2002.
The outlay of K6,676.7 million is substantially lower – around K1.12 billion – than the total appropriation in 2008 due to a drastic fall in commodity prices in the second half of this year.
This consists of recurrent expenditure of K3,904.5 million, development expenditure of K2,595.2 million and an injection into trust accounts of K177 million. Revenue is projected to fall by some K943.4 million while grants will fall by K136.9 million.
A total of K600 million previously set aside to finance equity in the LNG project has been injected into the budget to fund a number of expenditures.
Workers were spared any new taxes or increases in income tax and other benefits. So were consumers of goods such as alcohol and tobacco products.
Despite the greatest global financial turmoil since the Great Depression, Mr Pruaitch said the economy would continue to grow, but at a lower rate of 6.2% than the 7.2% projected this year.
The Treasurer warned that the 2009 Budget was presented amidst uncertain economic circumstances globally, and PNG was not immune from the fallout.
He said with no safety buffer in the 2009 Budget, the expenditure and revenue plan would have to be reviewed should commodity prices continue to fall next year.
“This is very important as there is no safety buffer in the 2009 Budget for the Government to access in the event of further falls in commodity prices. If commodity prices continue to fall, expenditure plans may have to be reviewed and revised in line with changing circumstances.”
While there would be cuts to expenditure, the Treasurer expects that funds saved in trust accounts from the commodity boom period would be used to build infrastructure, which would help shield the economy from some of the worst impacts of the global meltdown.
He said the Government would continue its focus on development in rural areas, with each of the 89 districts to receive a further K4 million (K356 million in total) in District Service Improvement Programme funds next year.
The Government will also continue the Education Subsidy Programme by providing K143 million to assist parents to subsidise school fees next year.
Apart from additional funding of K50 million for maintenance of the nation’s priority roads identified in the National Transport Development Plan, it will also provide K66 million to fund roads in provincial and rural areas identified in Madang, Gulf, Bougainville, Western Highlands, Manus and Simbu provinces.
This does not include the K38 million for Asian Development Bank road projects funded from a K30 million loan, with K8 million in counterpart funding.
Mr Pruaitch said the multi-billion-dollar LNG project was now entering the Front End Engineering and Design (FEED) stage, with a decision to be made towards the end of next year about proceeding with the project.
The Treasurer expects the 2009 Budget to be a balanced budget, despite a very small deficit of K10.3 million.