Govt looking externally for K1.5bil to finance deficit

THE Government is expected to source about K1.5 billion from external sources to finance the K1.9 billion deficit in the 2018 national Budget, according to the Bank of PNG (BPNG).
The deficit is equal to 2.5 per cent of nominal gross domestic product, according to the recently-released BPNG Monetary Policy Statement.
“The Government’s intention to restructure its debt profile by reducing short-term domestic debt and increase external debt is commended, given the low level of external debt which are mostly concessional,” the statement said.
“The Government’s budget for this year has planned expenditure at about K14.7 billion and revenue projected to be about K12.7 billion, giving a deficit of K1.987 billion.
“To finance the deficit, the Government intends to raise funds mostly from external sources. Of the total financing, 81 per cent is expected from external sources and 19 per cent from domestic sources. With the budgeted deficit financing for 2018, public debt is expected to increase from the level in 2017.”
BPNG has commended the Government’s efforts to focus on non-mineral sector and to diversify the export base, as this would lead to broader revenue stream and sustainable economic growth in future.
The statement also noted a progressive depreciation of the PNG Kina against the US Dollar from 2016 up to March 2018.
“The kina depreciated against the US$ from US$0.3150 (K1.02) at the end of December 2016 to US$0.3095 (K1.00) at the end of December 2017, and further depreciated to US$0.3075 (K0.999) at the end of March 2018,” it said.