Sourcing budget tough: Economist

 SOURCING the 2016 budget revenue will be a challenge as there is “little immediate likelihood” of an oil or liquefied natural gas recovery price at the backdrop of an Iran-Saudia Arabia race to pump more oil, an economist says. 

Institute of National Affairs Executive Director Paul Barker, pictured, was commenting on the concern raised by the Bank of Papua New Guinea that revenue targets in 2016 might not be reached as commodity prices (including LNG) remained depressed.

Barker said the current price would no doubt progress at or below US$30 a barrel.

BPNG Governor Loi Bakani in the bank’s September quarterly economic review raised concern that the Government’s price forecast of US$60 per barrel for oil and US$12 per mmbtu (one million British thermal unit) for LNG  (liquefied natural gas) were on the high side and the revenue targets might not be achieved.  “Demand for oil and mineral commodities is not going to shift, with the continued slowing of the Chinese and other BRIC economies (and fall in the Chinese stock market commencing in the New Year),  unless  an extended cold winter in the northern hemisphere sets in and boosts energy demand,” he said.

“A few commodities still enjoy good prices, like cocoa and team. 

“But this should continue to stimulate local economies especially where farmers are able to control the cocoa pod borer, but not make a significant effect upon the Government revenue which remains overly dependent upon extractive resource revenue and a narrow corporate and personal tax base.”

He said the Government was  clearly, seeking revenue from payment for resource equity from landowners, but that required a readiness by the landowners to borrow in current market conditions and (and lenders to feel secure in lending without State guarantees).