Barker suggests mini budget

 By SHIRLEY MAULUDU

IT will be much safer for the O’Neill Government to have a supplementary budget before mid-year, the Institute of National Affairs (INA) says.

INA executive director Paul Barker said with prices of PNG’s main export commodities, including liquefied natural gas, generally low – and in many cases significantly below levels forecast in the 2015 budget – it was critical that the government applied fiscal prudence, and did things sooner than later to safeguard priorities which included basic service provision. 

“While it is hard to see investment in sports stadiums as a key development priority for a country which is failing to meet any of its 2015 Millennium Development Goals, at least to the exorbitant and seemingly over-priced level which has been funded, it is now clearly too late to substantially prune expenditure for that activity,” Barker said.

“However, bringing a supplementary budget earlier (than mid-year) seems critical to safeguard priorities which should include basic service provision, including immunisation and essential pharmaceuticals, teachers, medical, police and related public sector salaries, functional grants, funding for church health and educational services, which are critical, especially for rural communities, infrastructure maintenance and necessary upgrades (in response to increased demand), and improved facilities to support the development of the private sector, including micro and SMEs (small and medium enterprises), particularly in agriculture (eg: to assist the development of the agricultural supply chain).”

Barker said although fiscal stimulation, including expenditure on major infrastructure was valuable, to promote job creation and economic activity, it should be undertaken with ample restraint and consideration of the debt consequences (passed on to the future to service), including impact on the balance of payments and inflation.

“The high level of demand for imports, partly driven by the level of public expenditure, is occurring at a time of relatively weak export earnings, putting inevitable pressure on the kina,” he said.