Capital account still in deficit: Bakani


BANK of PNG Governor Loi Bakani says although its current account turned into surplus since the LNG exports began in 2014, the capital account remains in deficit.
Bakani, pictured, said it implied that the LNG (liquefied natural gas) export revenue was being retained offshore and had not been coming to the country in the form of taxes to the Government.
Bakani said in the March 2016 Quarterly Economic Bulletin as long as the PNG LNG project was using the accelerated depreciation allowance, which exempted it from the payment of taxes on profits, the domestic payments by the project would continue to be for its operating expenditures, dividends and royalties, plus development levies to landowners and provincial governments, paid on the well head value of output.
He therefore assured the landowners and provincial governments of the PNG LNG project that the royalties and development levies were kept safely in the respective trust accounts at the Central Bank.
Bakani also urged the Government to increase its efforts in expanding traditional sectors such as agriculture to reduce its dependency on the mineral sector, to sustain the economy in the long term.
“Given the efforts already to invest in infrastructure, this should open the rural areas to domestic and international markets, and introduce advance cultivation technologies,” he said.
“It is very encouraging to learn that the Government has reached agreements to develop major integrated agriculture ventures in different provinces.
“In addition, the emphasis on development of the small medium enterprises and tourism sectors is encouraging. These sectors are expected to be the main source of employment and income generation for the population.”
Meanwhile, the 2016 budget has been adjusted. Government revenue forecast of K12.6 billion has been revised down to K10.7 billion – a shortfall of K1.9 billion.