PM: Economy stable and growing

PRIME Minister Peter O’Neill said the PNG economy was stable and growing.
He told parliament yesterday that the economy had been positive, recording unprecedented growth despite current uncertainties and the lack of capacity to sustain growth.
The prime minister said according to the 2012 mid-year Economic and Fiscal Outlook Report, PNG’s economy was growing at 8% a year over the past 10 years and this would continue.
“The mid-year 2012 budget performance report cards showed that the economy grew at 11% last year.”
O’Neill said the revised growth was expected to be 9.9%. The non-mining sector also increased to 13.1% this year.
“These growth rates are some of the strongest among the nations of the world. Inflation has been estimated to be around 8.8% this year,” O’Neill said.
He said on balance, the risk to the PNG economy was modest as the internal drivers for growth continued to dominate the external factors.
“In the first six months of this year, the fiscal outlook has weakened due to several factors such as the uncertainty in the global economic recovery and commodity price volatility and the strong appreciation of the kina against other currencies in the first half of this year.”
He said project revenues and grants inflow were expected to be lower than estimated in the 2012 budget and the shortfall was estimated to be K392.5 million.
O’Neill said actual expenditure recorded in the first half of the year indicated a potential overspending of K120.7 million due to increased spending and payroll and election-related expenditures.
The prime minister said corrective measures were in place to return the 2012 budget to one that was balanced. These options included the deferral of low priority projects and maintaining a tighter rein on expenditure.