Need for new investments

By DALE LUMA
EFFORTS to enhance business and investment opportunities are critical now, according to the Institute of National Affairs executive director Paul Barker.
Responding to queries from The National, Barker said it was critical to encourage:

MAJOR new (positive) investments and enhance the investment environment for large and SMEs (small to medium enterprises) into the future; and,
AS well as for new industries, including e-commerce.

Barker said little immediate revenue gain would be forthcoming.
“That leaves extra financing for the budget from loans from the domestic and international concessional markets to make up the increased shortfall,” he said.
“This is combined with some level of quantitative easing.
“The Government has already secured substantial funding through the issue of the Covid-19 bonds, largely to PNG financial institutions, even though some of this funding is merely replacing expired, largely short term, Government securities.”
Treasurer Ian Ling-Stuckey said last week that latest forecast showed a K2.2 billion revenue drop and the Government intended to fill the revenue gap with more borrowing and budget cuts.
“Government has limited choices in the face of a major shortage of revenue,” he said.
“It is up to the Government to choose where to borrow, assess and compare the associated costs and conditions.
“Securing finance from other sources, even issuing sovereign bonds, also comes with commitments to lenders on accountability and assurance that the debt will be managed and risk avoided, to safeguard their exposure.
“It’s very difficult to beat the finance from the international financial institutions even if some project funding may be offered quite competitively from other sources, such as country-specific export finance facilities, albeit invariably with strong and often controversial strings, such as lack of open tendering or full local participation.”
Barker said revenue was already tight before the Covid-19, with years of deficits and a weak economy.