THE National Government has handed down a massive K7.5 billion money plan for 2010 that reflects its priority of promoting economic growth through empowering and transforming the rural economy.
Treasurer and Finance Minister Patrick Pruaitch yesterday handed down the Somare Government’s eighth consecutive budget since taking office in 2002 and the third since it was returned to power in the 2007 elections.
The total revenue and grants are expected to be K7,489.7 million, which is substantially higher – K850.1 million, or 12.8% higher than the revised 2009 estimate of K6,639.6 million – due to an increase in tax revenues and the expected start of construction work on the PNG LNG project.
The 2010 Budget is balanced, with expenditure in line with the forecast revenue and a comparatively small deficit of K86 million.
The recurrent expenditure is K4,095.5 million comprising K2,380.2 million for National Departments, K925.2 million for provincial governments, K58 million for the Autonomous Bougainville Government, K269.4 million for commercial statutory authorities and K471.1 million for interest payments.n From Page 1
The total development budget will be a record K3,393.8 million, of which K1,771 million is from direct Government funding, K268.9 million from concessional loans and K60 million from infrastructure tax credits.
There are no new taxes or increases in income tax for workers.
Consumers of alcohol and tobacco products have also been spared.
Public servants will be happy as the Government has allocated K15 million to meet the pay increases negotiated between the Public Employees Association and the Department of Personnel Management in 2010.
The district services improvement programme (DSIP) will continue, with K2 million for each of the 89 districts and the 20 governors have also not been forgotten.
They will now each receive K1 million under the new provincial services improvement programme (PSIP).
Despite the global financial crisis, which led to a significant deterioration of the global economic environment, Mr Pruaitch said that the real economic activity in PNG was expected to grow by 8.5%, which represented a significant increase from very credible 4.5% growth rate forecast in 2009.
However, there are inherent risks to the 2010 Budget.
These include any delays to the PNG LNG project, unforeseen mine shutdowns, volatility or fall in commodity prices and any unforeseen stalling in the global economic recovery.
The Treasurer said that the Budget might have to be reviewed and adjusted in line with any of these unforeseen setbacks.
Mr Pruaitch said that as a consequence of this strong economic growth, inflation was expected to remain relatively high at 7.4% forecast in 2009 and was expected to rise to 9.5%.
This is due to the expected start of construction on the LNG project and high Government spending – from trust funds and measures announced in the 2010 Budget.
He said while the Government had been realistic with its economic assumptions and revenue forecasts, it recognised that the expenditure would need to be closely monitored in 2010 and, if needed, might need to be adjusted to reflect changing economic circumstances.
Mr Pruaitch said that economic prospects in the medium term look promising, particularly as a decision on the LNG project proceeding was imminent.
“However, the Government is mindful about the development challenges the country faces and uncertainties that may lie ahead,” he said.
The Opposition will present its Budget reply next week.