K6.6bil budget deficit likely

By MIRIAM ZARRIGA
THE total 2021 Budget expenditure is expected to be around K19.6 billion which will require K6.6 billion in financing from external and domestic sources, it has been revealed.
Treasurer Ian Ling-Stuckey who is expected to table the 2021 national budget next Tuesday, said financing facilities available included the World Bank Covid-19 emergency funding, the Asian Development Bank’s state-owned enterprise reform linked policy loan and pre-signed project-based concessional lending worth at least K1.6 billion.
“In the domestic market, demand for Treasury bills and bonds can be supported by further quantitative easing by the Bank of PNG,” he said.
He said a major policy initiative to support market liquidity was the securing of commercially-held Treasury bills and bonds in a secondary market.
“The current planning is for net Treasury Bond issuance of K1.6 billion and net Treasury bills of K500 million.”
He said the focus of the 2021 budget would be on roads “connecting PNG, supporting rural communities, government tuition fees and strengthening State-owned enterprises through smarter and targeted reforms”.
“It will continue to fully fund Government service priorities in the health, education, law and order and infrastructure.
“K600 million is to cater for further Covid-19 related expenditures in 2021 (and) anticipated to rise, either for response in health or as a fiscal stimulus to the economy, or both.”
The Government will build the budget around key principles including:

• Spend the money we have more wisely;
• Raise revenues more fairly;
• Finance debt more cheaply;
• Leverage friendly international support more intelligently;
• Focus on growth in the agriculture sector and the informal sector;
• Distribute resource benefits more equitably;
• Stimulate non-resource growth back to 5 per cent annually;
• Freeing up foreign exchange; and,
• Create 10,000 jobs annually.