THE reform of intergovernmental financing arrangements (RIGFA) is working well for the provinces and local-level governments, according to the National Economic and Fiscal Commission (NEFC).
NEFC chairman and chief executive officer Nao Badu had commended the Government for implementing the new system of intergovernmental financing as it should by law.
In the 2010 Budget, provinces and LLGs were given a 17% increase in their goods and services grants (K30 million) compared to the 2009 budget allocations.
This is on top of a 40% increase in 2009 (K37 million) for goods and services from 2008.
This is the result of the new funding arrangements where funding is now distributed on needs basis.
It is also affordable and sustainable for the Government, as the total funding for provinces and LLGs is now a set percentage of total resources available to the Government.
In 2009, an amount
of K177 million was allocated for the equalisation amount to be shared amongst the provinces and LLGs.
For next year, the share has increased to K207 million which is 5.48% of the net national revenue received in 2008.
As part of the implementation process, the NEFC is working closely with the Department of Treasury to close the priority gap.
This is done by visiting the provinces to encourage them to increase their budget allocations and spending on core MTDS areas, namely health, education, agriculture, transport infrastructure, village courts and HIV/AIDS.
Mr Badu said the budget for recurrent goods and services budget is the most important part of the budget which is intended for delivery of basic services.
“Without this funding, drugs will not be distributed to the aid posts in the rural areas, school materials for rural schools will not be delivered and rural roads will not get maintained.
“The increase in the function grants in 2009 and 2010 as a result of RIGFA are a great step forward in delivering services to the people of Papua New Guinea.”