Projections may be ‘optimistic’: Barker
THE 2009 Budget projections have been described as “optimistic” by the director of the Institute of National Affairs, Paul Barker.
He said projections to offset a decline in mineral revenue were based on the non-mineral sector amid a global financial melt-down that had seen the main commodity prices slump in recent months.
Mr Barker said the drop in commodity prices amid a world financial crisis would wipe out the windfalls that the country had been enjoying for the past few years.
He said if the kina remained strong, it would undermine the projections.
“The non-mining sector will keep us going but pressures of the global economy must go down and commodity prices remain steady or increase as the sector is also prone to climatic cycles,” Mr Barker said.
He commended the increased funding to provinces as this could provide a good stimulus to economic growth.
However, he stressed the need to put in place better accounting processes to encourage transparency and good governance and ensure real growth and sustainability.
On the District Support Improvement Programme (DSIP), he said the K890 million allocated to all districts this year had not had any real impact, with most provinces yet to receive the funds.
He said despite increased district funding, services had declined over the years but he hoped the extra funding this time would improve the situation for the majority of the rural population.
Mr Barker said the Government had a wish list of projects, some of which are valuable while others are of no real value.
The Government had, in its budget projections, also included K600 million that had been freed from LNG project commitments after the IPBC found additional money.
“The crunch of this move will be felt next year if commodity prices remain low and the global economy continues to face a downturn … there will be no funds to draw on,” Mr Barker said.
On the expected revenue to be derived from the PNG LNG project he said: “There is a risk of having a revenue gap before the world economy starts to pick up and benefits of the LNG project start flowing in ...”
The LNG project will go into the construction phase next year with a major demand on housing and expected employment of some 10,000 overseas and local workers.
He also raised concerns on the National Agriculture Development Programme, which he said had not achieved much this year despite K100 million funding.
The Government has decided to transfer the existing K100 million funding from the recurrent budget to the development budget next year.
Of this K100 million, K80 million will go to the NADP while K20 million will be made available to the National Development Bank for providing credit facility to rural farmers.
Mr Barker, who is a member of the PNG Business Council, said: “Businesses need continued stability and investment.”
He also highlighted the need for upgrading key infrastructure like the Lae Port, which is the nation’s major port of call and a major transshipment port for the Asia-Pacific region.
Mr Barker bemoaned why only K4.6 million was allocated for the Lae Port project in the 2009 Budget.
Other necessities for business he highlighted include good law and order and technical education training.
He said although stability was essential, it was a difficult and trying time amid a financial crisis.
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