Economy made progress: Abel

THE economy has made some progress over the past few years despite some unforeseen circumstances which had contributed to the downturn, says Minister for Finance and Rural Development Charles Abel.
The former Treasurer made the remarks when asked to comment on the status of the economy and the achievements over the past two years.
Abel said he came in as a minister after the 2017 election when the economy was under enormous pressure, compelled with falling commodity prices and also because of the fallout of a drought that had affected Ok Tedi mine operations and other resource projects.
“It was difficult after the election because the public servants took their eye off the ball a bit, and the reality was that we were facing a decline in the revenue to GDP for quiet some years,” Abel said.
“Of course, in anticipation of the revenues from the PNG LNG project revenues too, the government took a deliberate policy to rely on more on borrowing.
“We deliberately went into deficit borrowing about K2 billion a year to supplement the budget and accelerate Government initiatives.
“We went heavily into investing into infrastructure and subdistricts programmes, invested in free education and free healthcare, subsiding tertiary and secondary education.
“So we pushed the debt envelop up towards 30 per cent of GDP because we were confident on the back of the PNG LNG project.
“That put a bit of pressure on the economy because, when you make replacement, you also pay interest costs in a row but it was a deliberate strategy to boost investment into those areas and work a way into balance budget.
“So with these combination of factors, and the fact that the revenues from the PNG LNG did not come as anticipated, it put us economically under pressure,” the former Treasurer said.
He said the nation also hosted Apec which also came at a cost but was done in anticipation of gaining returns and promoting the country.
“What I did as Treasurer was to initiate the 25 point – 100-day plan, and there were many elements to the plan but basically to get revenue going again, for debt financing and to make some critical investments like getting the ADB investment going into the Highlands Highway, completing the investment into the ports, getting some investment into power generation and others in the plan,” he said.
Abel said the result was increased revenue collection by K2 billion for over 18 months but with ADB and World Bank support that helped to restructure our debts and reduced the reliance on domestic borrowing.