Budget a dogmatic plan for stronger economy: Economist

AN economist has described the government’s 2018 Budget handed down last Tuesday as “a dogmatic plan to achieve the goals of a stronger fiscal situation over the medium term.”
Stephen Beach, a partner with accounting firm Price Waterhouse Coopers (PWC), said this last Thursday during the company’s budget function in Lae.
The function hosted in conjunction with the Lae Chamber of Commerce and Industry was attended by members of the business community in the city.
Beach said the 2018 Budget showed that the government was serious about increasing its existing revenue and tightening up on its expenditure.
“What we have seen from the government is a dogmatic plan to achieve the goals of a stronger fiscal situation over the medium term,” Beach said.
“It (budget) has articulated the commitment of fiscal restraint boosting government revenues and infrastructure investment in the non-mining sector to support development.
“The budget paints a picture of a strong fiscal position taken by the government with an increase in revenue in 2018 by 16 per cent.”
Beach said while it was encouraging to see the government commitment to see a fiscal resising, it would not happen overnight.
He said the key risk for the government in the medium-term plan was how they executed those strategies of increasing revenue and decreasing expenditure.
“History tells us that’s not going to be easy,” he said.
Beach explained that the government’s revenue for the 2018 Budget would, to a larger degree, come from the non-mining sector.
“For the soft commodities, there are significant increases in agricultural volume focus for coffee, cocoa and palm oil in 2018 compared to 2017,” Beach said.
He said the medium-term projections to 2022 showed significant increases in cocoa and palm oil.
He said for cocoa there has been a lot of investment through the Productive Partnerships in Agriculture Project (PPAP) and for palm oil there were a number of new palm oil growers starting projects.
“So the real challenge for the PNG economy is to become more diversified and hence less reliant on positive movements in global commodity prices to drive investments,” Beach said.
“As the budget paper notes, the important feature of this higher growth in 2018 is driven by the non-mining sector of the PNG economy which has a direct impact on the bulk of the rural population,” he said.
“Specifically, non-mining economic growth in 2018 is focused to increase from 1.9 per cent in 2017 to 3.5 per cent in 2018,” Beach said.
“That’s a significant growth projected in the non-mining sector. This is to be driven by four non-extractive industries.”