Budget will focus on cost-cutting, says Abel

THE Supplementary Budget to be tabled in Parliament next week will focus mostly on cost-cutting to restore the fiscal discipline of the 2017 national budget passed last November.
Deputy Prime Minister and Treasurer Charles Abel the cuts would be in Services Improvement Programmes and other areas.
“We will have to temporarily adjust the fiscal responsibility act to allow the debt-to-GDP ratio to breach the 30 per cent ceiling,” he said.
“The fiscal debt-to-GDP ceiling will be allowed to be pushed to 35 per cent while the actual debt to GDP is projected by the end of this year to go to 32 per cent.
“If we did not take action through a supplementary budget, it would have pushed it up to 34 per cent and the fiscal deficit would have blown up to close to 4 per cent.”
Abel said the 2018 budget to be tabled in Parliament in November would not be formulated until the details of the 2017 supplementary budget had been worked out.
“We’ve had very fruitful discussions with the World Bank and the Australian government and also the Asian Development Bank for budget support in 2018,” he said.
He said the Government was testing the new type of modality “where some of our development partners are coming in with very concessional funding to give us budget support so that we can restructure our debt portfolio”.
“At the moment, too much of our debt portfolio is short-term debt that we’ve created from money borrowed from short-term money market which is quite expensive,” he said.