Budget forum talks economy

By EMMANUEL MAIPE
PAPUA New Guinea must manage macroeconomic risks because it will have a severe impact on other economic sectors.
Treasury Department deputy secretary (economic and financial policy) Anthony Yauieb told participants at the national budget forum yesterday that there would be a lot of pressure on the exchange rate, increased liquidity and higher overall demand in the country as a result of the major PNG LNG project.
“This could undermine the competitiveness of the non-mineral sector of the economy, such as agriculture, potentially having a severe impact on employment and incomes in labour sensitive sectors of the economy.”
The need to manage macroeconomic risks stems from past experiences from new resource sectors and earlier commodity booms not having the revenues translated into improved socio-economic indicators and sustained development outcomes as a result of not managing properly the risks.
“We cannot afford to squander this opportunity by dismissing the macroeconomic risks that need to be managed,” Yauieb said.
Referring to the PNG Sovereign Wealth Fund (SWF), he said the fund was designed to manage public mining and petroleum resource revenues with the aim to support macroeconomic stabilisation to manage risks.
The fund would also support development objectives and asset management as well, through its Development Fund and Stabilisation Funds.
Yauieb also said that it must be recognised that shortage of funds for development has not been the problem of effective development spending on development projects,
but of poor ability of the
public sector to establish
and deliver project plans
that has seen funds wasted rather than being put to good use.
The national budget forum was held at the National Research Institute in Port Moresby.