Discipline needed to ensure fiscal policy won’t affect growth: Deloitte

CAUTION and discipline is required to ensure proposed fiscal policy changes do not hold back economic growth that will more sustainably plug the revenue gap, according to Deloitte.
The company stated in a presentation on the country’s 2022 National Budget that managing the PNG economy through the global pandemic remained a difficult challenge.
Europe and the United States are experiencing a resurgence of the virus which has the potential to dampen the global economic recovery, it said. Despite the climate change pledges placed at COP26, a cold winter in the northern hemisphere has shown that the developed (and developing) world is still deeply reliant on fossil fuels.
This presents a short-term opportunity for PNG to capitalise on key oil and gas projects. While the significant budget deficit remains a concern, it is promising to see a shift towards expenditure on items with long term outcomes, with expenditure increases in infrastructure expenditure, health and education.
The Budget displays an optimistic outlook for the long-term.
There are challenges in achieving this, but if a long-term approach can be applied to Government policies and businesses are afforded a stable investment environment then this can allow the growth that will see Government targets met.