Polye: Tax revenue is vital

 LACK of macroeconomic stability can affect Papua New Guinea’s tax revenue, private sector and job creation opportunities, Treasurer Don Polye says.

“Without macroeconomic stability there is no tax revenue to pay for vital government services, businesses can’t operate effectively and there are no new jobs to employ our people,” he said. 

Polye said the Government would continue to maintain macroeconomic stability in the country through its sound fiscal and monetary policies.

He reiterated that excessive Goernment borrowing and poor expenditure effectiveness in the late 1990s led to a full blown macroeconomic crisis. 

“Treasury put in place PNG’S first medium term fiscal strategy, which allowed the country, over a decade, to greatly reduce Government debt levels. 

“This led to higher rates of economic growth and provided the confidence that has led to the investment boom that PNG is currently experiencing,” Polye said.

“We have to look at examples of even rich developed countries in European countries that have been plunged into chaos as a result              of a lack of macroeconomic stability.”

The treasurer said the economic growth proved remarkably resilient during the global financial crisis and, real economic growth had averaged over 10% in the past two years and was set to continue at a strong rate over the medium term.

He added that the Government was also making progress in reducing the scourge of corruption and improving the effectiveness of the Government service delivery.

“We need to ensure that our debt levels and structure remain sustainable and resilient to shocks and that we maintain our clean separation of monetary and fiscal policy,” Polye said.

“We also need to maintain price stability so that standards of living and savings are not eroded and businesses have the confidence to invest and to ensure that the non-mining export, or import-competing sectors of our economic are still able to share in the growth and prosperity that is being created.”