Bank advises State not to spend on new projects

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The National, Thursday April 2nd, 2015

 BANK of Papua New Guinea Governor Loi Bakani has urged the National Government not to spend on new projects. 

Bakani said the Government should maintain spending on existing project developments such as those related to 2015 Pacific Games. 

He said this was because the inflation rate would increase because of increased economic activities, and revenue expected for this year would be low.  

Bakani said it was important for the Government to make adjustments to this year’s budget and maintain funding for projects that it had started on.

The projected inflation this year would about 6 per cent, he said when delivering the BPNG March monetary policy statement yesterday. 

“Unlike in the past leading up to 2013, last year we saw some increase of inflation pressure in PNG,” he said. 

“It provides another challenge which is consistent with the high economic growth; you expect some pressure in the economy in terms of high inflation picking up in prices.

“That makes financing of the budget this year, quite a challenge, given that revenue will be down this year. 

“So the financing of the budget and the adjustment to the budget will be an ongoing challenge for the government and it’s positive that the government made some announcements in terms of starting to monitor the budget outcomes and the expectation of the budget this year to see whether the possible adjustment can be made. 

“The prime minister and the treasurer had come out and openly said that they will do that this year.

“Our (BPNG) advice to the Government is to maintain the existing projects, the big ticket items and not to facilitate some of the new ones this year so that we can complete those ones that we have started, particularly the Pacific Games infrastructure and other health and education expenditures,” Bakani said. 

“Ongoing coordination between ourselves and Treasury (Department) in ensuring that the national budget for this year go as planned … the big priority areas be considered ongoing for the budget.”