Is our economy really in safe hands?

I WAS moved by the way Don  Polye analyses the economy and where the government stands in relation to it.
It was encouraging to see a political head and a senior government minister trying to put together what he understood and the advice he received on our economy.
What he said about the drop in commodity and mineral prices as well as the increase in li­quidity as a result of increased spending by LNG project investors is true.
The price drop will lead to the narrowing of the trade account surplus
in the balance of payments and lower mineral tax revenues received by the government.
However, increased spending by project investors and a general pickup in the private sector will also increase overall economic activities.
Polye also said PNG would con­­ti­nue to grow given the current rate.
But what he failed to understand was the decline in our export reve­nues was a result of our kina appreciating against our major trading partners.
He also failed to mention the low
tax revenues and why there is a long period of tax concession for some companies.
This will hurt our economy and the government will lose big time.
The basics of economics is where there is more spending, less taxes, the economy will experience increased inflationary pressure. 
The good news is that we have an increasing and booming employment sector.
It is also good to realise that the treasurer is tightening the fiscal po­licy stance by playing it very safe, but for how long?
I was delighted to know when the LNG construction phase winds down, the government is ready to
put more money into the economy.
In the face of all these good and
bad news, what is the best thing to do?
Inflationary pressures have gone far from the projected 7.6% for 2012.
What is Polye’s position on this as it will hurt ordinary Papua New Guineans.
The other interesting question the treasurer failed to address was; what is really the cause of the K500 million deficit that was projected?
Did the election spending through increased internal borrowings have anything to do with increased budget deficit?
Is this tight fiscal policy?
How could that be given that we have experienced strong economic growth over the past 10 years, a growth rate of over 6% and well above the average growth of the “four little dragons” in Southeast Asia?
Why do we have to borrow and where is the money saved in trust accounts?
History points us back to 1992 and 1997 when our economy was near collapse.
It directs us to believe that it was because of election-related spending that resulted in the government going into unprecedented debts.
We were unable to support our kina back then because of high debts.
Therefore, the best option was to float the kina, which resulted in an alltime low kina value.
Similarly, in 1997, there was no support for our kina because we had no foreign reserves.
So we turn to the World Bank and IMF, who have their own conditions and structural policies.
User pay policy and land mobili­sation policies were implemented through such conditions by the World Bank and IMF.
What is the real story now?
Is our economy in safe hands as proclaimed by Prime Minister Pe-ter O’Neill and is our budget projected to be balanced as claimed by Finance Minister James Marape?
Under the economic conditions experienced now, there is a lot to be desired.

Simon
Madang