PM says economy OK

PRIME Minister Peter O’Neill has assured the private sector, investors and the people of Papua New Guinea that there is nothing to fear regarding the economy of the country.
He said the K500 million budget shortfall in the first half of the year was expected and the K10 billion  sovereign debt of about five to six years ago has been cut back to K6 billion.
The government had strategies and alternatives in place to rectify the 2012 budget, he said.
Speaking at a media conference at the Jackson International Airport before flying off to the Pacific Forum Leaders’ conference in the Cook Islands, O’Neill said the government was very cautious on domestic borrowing and was living within its budget to avoid any debt crisis that might destabilise the country’s economy.
Opposition’s finance spokesman Joseph Lelang said last week that PNG was poised on the brink of an economic precipice with high debts incurred during the 2012 elections, excessive domestic borrowing and falling revenues.
“I want to assure the people that the government has anticipated a K500 million shortfall in the 2012 budget due to low commodity prices on the world market,” O’Neill said.
“However, we are prepared and have come up with strategies to rectify this problem.
“We plan to address this shortfall by re-organising the current budget allocation. We will re-allocate unused funds from non-priority areas to priority areas to cater for the shortfall.
“As a responsible government, we are also mindful of the effects of borrowing additional capital to offset this shortfall. Therefore, we will not be borrowing. There will be a supplementary budget later this year to address this.“Another option the government has is to use bonds issued by the Bank of PNG.
“I would also like to clarify the misinformation about rising national debt. Our sovereign debt now stands at K6 billion, compared with some K10 billion five to six years ago. We have been slowly repaying the debt.
“The expenditure due to the elections includes the K160 million that was given to the PNG Electoral Commission to run the elections. The PNGEC had initially requested for K240 million. However, the shortfall of K80 million has already been rectified.”
The prime minister said the Treasury Department  predicted a 9.9% growth in the economy in 2013.
“With major projects like the PNG liquefied natural gas coming on stream, the economic was looking good,” he said.
“I would like to assure the private sector that there is no need for alarm as our economic outlook is alright.”
O’Neill said one cost-cutting measure was slashing the hugely excessive public service within the next five years, at both national and provincial levels.
“I want to reassure the people of PNG and our investors that there is no need for alarm as there is no looming catastrophe.”