Debt raised to give economic growth a lift

DEPUTY Prime Minister and Treasurer Charles Abel says public debt as a percentage of Gross Domestic Product climbed from 23 per cent in 2012 to 32.5 per cent in 2016.
He told the PNG Petroleum and Energy Summit in Port Moresby yesterday that expansionary fiscal budgets over the past five years had sought to stimulate the economy after the winding down of the PNG LNG construction phase. It was to increase investments on enabling infrastructure, education and health.
Abel said this was largely intentional through a series of budgeted fiscal deficits.
But the economic shocks, combined with growth in Government’s operating costs had put pressure on its fiscal strategy.
Abel said the anticipated windfalls from the PNG LNG Project which were to underwrite the strategy had not yet materialised because of the collapse of the oil price right after the start of first production.
This windfall was based on an oil price above US$100 per barrel.
He said the national elections in 2017 added further costs and bureaucratic inertia (or more than the usual inertia) and governance distraction.
Abel said the Government immediately initiated a 100-day 25-point plan to maintain fiscal discipline and prioritise remedial measures.