Ripple effect may flow on

Business, Normal

The National, Thursday August 27th, 2015

 THE private sector may need to adjust to the flow-on effect as the Government moves to cut back on its expenditure, Bank of Papua New Guinea Governor Loi Bakani says.

He said this yesterday when highlighting the current state of the country’s economy. 

Bakani said especially businesses like contractors that were being engaged by the Government would need to be prepared for any inconvenience that may be caused as a result of the expenditure cut back by Government. 

“If the government starts to cut down on expenditure, that will have a flow-on effect on those contractors, those private sectors who rely on government business,” Bakani told a press conference.

“So that will have a flow-on effect and would also reduce private sector activities and the businesses house will have to adjust.

“It’s a situation where not only the Government will adjust but will also have a flow-on effect on private sector. 

“The private sector will have to look at that and they know their business very well.

“They (private sector and businesses) will adjust to cut down on certain imports, they will allocate resources on priority areas only within themselves so that they can continue to make money and stay alive…continue their business.” 

Bakani said that the cut back by Government would also have an effect on consumers as well.

“The cut back will not only be done by the Government but will continue on to the private sector and after the private sector it’s you and me – the consumers will also have to adjust,” he said.

“The basket of goods that we eat every day will have to change also.

“It’s a structural issue that will affect everybody down the line.

“Those who rely on government will also have to adjust to Government’s changes and adjustments.”