Concerns raised over govt finances


The Government finances continue to spiral out of control because of the government’s inability to implement policies to deal with high budget deficits and record public debt, Opposition Leader Patrick Pruaitch says.
Pruaitch yesterday said that after the highly damaging 0.6 per cent contraction of the economy last year, there was little hope PNG could attain 4.4 per cent growth, as projected in last week’s mid-year economic and fiscal outlook.
Treasurer Sam Basil disclosed that the budget deficit in the first half of this year had risen to K1.67 billion after government spending soared to K7.5 billion.
The deficit is forecast to hit K2.4 billion, K506 million above the budgeted figure for the year.
“The deficit forecast is extremely conservative,” Pruaitch said.
“Due to lack of government controls, particularly over personnel emoluments that have been grossly under-estimated, the deficit could increase to a debilitating K3 billion.”
He said the 2019 mid-year economic and fiscal outlook forecasts that public debt was anticipated to reach an all-time high of K28.1 billion by the end of this year, assuming that the fiscal deficit was contained at K2.4 billion. Some K6 billion in debt owed by State-owned enterprises had not been included in this estimate.
“The government raised K374.9 million through short-term Treasury Bills in the first half of this year and was forced to use an additional K1.3 billion, effectively depleting its previously raised US$500 million (about K1.69bil)) Sovereign Bond,” he said.
“Now the Marape government is seeking extremely expensive borrowing this year of an additional US$500 million (K1.69bil) from Credit Suisse,” Pruaitch said.
“In all likelihood GDP (gross domestic product) growth will remain considerably below 4.4 per cent.
“With no changes in policy direction, this government is destined to perpetuate previous trends that resulted in falling average incomes.
“Sadly, the recent upturn in employment is also likely to become negative once again.”