Official warns against high govt debt

By Lemach Lavari
AN economist has warned that high government debt and expenditure will impede the growth of local firms and the potential of the agriculture industry.
At an event hosted by the Port Moresby Chamber of Commerce and Industry in Port Moresby yesterday, Westpac senior economist Justin Smirk said agriculture and domestic businesses had the potential to boost economic growth.
“My belief is that the agriculture industry in PNG is the key way of lifting more people out of poverty. Agriculture has the potential to move PNG into a more developed society,” Smirk said.
But he said the industry and firms would continue to be challenged as government repaid debts domestically.
“Government debt is attributed to it spending more than it has made in the past years,” Smirk said.
“Although the statistics show a decrease of expenditure from 40 per cent of GDP in 2013 to 19 per cent this year, it is still a large figure compared to the percentage of revenue generated.”
He said high government spending would result in deficits and debt accumulation.
“There must be more domestic credit growth and slower government credit growth. I’m not saying the government should have looser policies fiscally. Credit growth and availability should be organic and consistent to allow businesses to grow,” he said.