K2 billion eyed via debt financing

DEPUTY Prime Minister and Treasurer Charles Abel says the Government is looking at raising around K2 billiion through debt financing to support the 2019 Budget.
Abel in his budget speech in Parliament yesterday, highlighted that the 2019 total revenue grants were projected at K14.27 billion which was an increase of K866.5 million or 6.5 per cent compared with the estimated 2018 out-turns.
He said this projection comprised K10.8 billion in tax revenue and K2.5 billion in other revenue and K943.1 million in donor grants.
“A total of K1.9 billion will be raised in debt financing to support the funding of the 2019 Budget,” Abel said.
“Commensurate with the new medium-term development strategy 2018-2022, this net borrowing will be financed in full through external sources totalling K2.5 billion of which K629.4 million is for domestic debt redemption.”
Abel said tax revenue was expected to increase by K465.5 million while non-tax revenue was expected to be K482.5 million higher than the estimated 2018 out-turns.
He said revenue from major tax heads were projected to increase above 2018 levels except for personnel income tax which was projected to be lower.
“Company income tax is projected to reach K2.5 billion, mining and petroleum tax K856 million, dividend withholding tax K197 million, goods and service tax is expected to reach K2.2 billion, excise duty K923 million, export tax K405 million, import duty K358million and import excise K322 million.”
Abel said the lower income tax projection of K2.9 billion reflected the Government’s policy to lower the effective tax on low income earners by lifting the two lowest thresholds, the tax free threshold from K10,000 to K12,000 and the 22 per cent tax threshold from K18,000 to K20,000.
He said non-tax revenue was expected to remain high and above the 2018 levels by K119.9 million. “This is comprised of K1.2 billion in dividends from State-Owned Enterprises (SOEs), K750 million in statutory transfers from statutory authorities and K156 million in fees and charges.”
Abel said dividends from SOEs were expected to increase with bulk contribution from Kumul Petroleum Holdings Ltd (KPHL).
He said KPHL was expected to pay K800 million in 2019, Ok Tedi Mining Limited K200million, Kumul Consolidated Holdings Limited to pay K80million, Motor Vehicle Insurance Limited to pay K25million and Bank of PNG to pay K100million.
Abel said with the implementation of the Public Monies Management Regulation Act, about K750 million was expected form the new revenue stream.
He said revenue from departmental fees and charges was expected to increase of which K58million was expected from the Department of Labour and Industrial Relations, K52million from the Lands Department and K46millio from other departments.