By LEMACH LAVARI
THERE is a positive outlook for the economy in 2018 because growth is expected to be driven by non-mining sectors – despite the K14.8 billion deficit budget for 2018, says Treasurer Charles Abel.
Deputy Prime Minister Abel, who tabled the budget for 2018 in Parliament on Tuesday, told the PNG Mining and Petroleum Conference in Port Moresby yesterday, that 2018 was projected to be a good year for coffee and copra due to high global demand.
In addition, he said continued improvement in the agriculture, fisheries and forestry sectors, plus high prices for key commodities oil and gold were expected to contribute to the total real growth projected at
2.4 per cent
“This is marginally higher than that projected for 2017,” he said.
Abel, pictured, also pointed out that the 2018 budget projections had not taken into consideration some of the major projects in the pipeline such as the Papua LNG, Wafi-Golpu, Freida mine and Solwara 1.
He said the challenge was to bring these projects online to boost the 2018 budget and PNG’s economy.
On the deficit budget, he said it was caused by the disappointing return from the PNG LNG project, plus the subsequent increase in government spending.
“Budgets over the past five years were focused on development in infrastructure, education and health,” he said.
“These budgets, with their increased spending, were made with anticipation of the windfall returns from the US$19 billion (K57 billion) project.”
Abel said while the country had benefited from the PNG LNG, the anticipated windfall used to underwrite the government expansion strategy was yet to fully materialise.
“That has resulted in larger than anticipated budget deficits,” Abel said.
He also said total government revenue had fallen sharply from 20 per cent of Gross Domestic Product in 2012 to 13.4 per cent in 2016.
“It is expected to decrease further to below 13 per cent by end of 2017,” he said.
“Government will respond by cutting discretionary spending from the capital budget.
“This will further suppress economic conditions.”
By LEMACH LAVARI