Budget financing lacking: Economist

The National, Thursday July 21st, 2016

THERE is likely to be a supplementary budget for 2016 budget at some point as revenue remains below in the first quarter of this year, Institute of National Affairs executive director Paul Barker says.
He  told The National yesterday that there had been a major carry-over of outstanding liabilities from last year that needed to be addressed.
“Financing of the 2016 budget remains substantially inadequate at this stage, albeit that much public expenditure has been severely slashed,” Barker said.
“Cutting expenditure to live within revenue can of course be achieved, but only at the expense of discontinuation of important public expenditure.”
Barker cautioned that there would be strong pressure to release public funds to political priorities, including district grants.
“But it’s important that allocations and reallocations are made in a transparent and considered basis, and that the scenario of 1990s is avoided, where cuts invariably left salaries retained, but little or no operating funds, including for various core services, human resource development, as well as successor recruitment.”
Barker said there were some encouraging trends over the recent months, giving some positive stimulus to local economy, notably strengthening of gold prices (on the back of global financial instability) and a modest improvement in energy prices (oil and gas) during second quarter and recommencement of Ok Tedi production on a reduced scale from March.
“Cocoa prices have remained firm, and there’s been a moderate improvement in coffee prices, coinciding with an improved year of coffee crop,” Barker said.
He said trade balance was firmly positive, based upon this and constant shipments of LNG, but also as a result of severe cut in imports.