Fiscal deficit likely to be more than K2b: Bank

The National, Friday July 15th, 2016

THIS year’s fiscal deficit will likely to be more than the K2.1 billion estimated in last year’s budget, according to a new report.
Asian Development Bank (ADB) noted in its Pacific Economic Monitor Report that last year’s expenditure obligations were carried into this year without corresponding allocation in this year’s budget.
The report noted that these obligations totalled to about K400 million in the first quarter alone.
Further revenue collections are expected to be about K1.5 billion lower than 2016 budget projections.
Although the medium term fiscal strategy plans for modest increases in revenue and expenditure until 2020, forward revenue projections may not be realistic.
Without fiscal consolidation, PNG is likely to continue to miss its fiscal targets.
The report noted that the 2015 final budget outcome reported that revenues fell 21.3 per cent short of original budget estimates.
Government cut total expenditures by 16.7 per cent (K2.7 billion), yielding a budget deficit equivalent to 5 per cent
Presenting the report yesterday, ADB’s country economist Yurendra Bassnett said: “We’ve seen few years of deficit and Government is now trying to move into a balanced budget by 2020.
“We saw a substantial shortfall in revenue.
“We feel that revenue remains soft.