State adjusts budget

The National Main Stories

BY MALUM NALU

PARLIAMENT has approved adjustments to the K2.1 billion deficit national budget passed last November to address the shortfall in revenue primarily caused by the low global oil price.
Treasurer Patrick Pruaitch told Parliament last Thursday before the supplementary budget was passed that the plan was to restore that K2.1b deficit budget through the:

  • cutting of expenditure by K928 million (from K14.7b in the original budget to K13.8b);
  • generating of additional revenue of K958 million through Government-owned  enterprises. It had forecast last November an annual revenue of K12.6 billion. It has now revised that to K10.7b – a shortfall of around K1.9b.

Pruaitch said: “We have to live within our means and weather the storm (lower global oil price).”
“The first six months of this year has been tough for many economies and PNG has been no different.
“Certain gains in the global economy have been overshadowed largely by Great Britain’s exit from the European Union.
“Movements in commodity prices continue to guide development in the global economy in 2016. The impact for us (PNG) is prices of our key commodities, especially oil has traded below the 2016 budget assumptions and we are not alone in underestimating the extent and length of the lower oil price.”
The mid-year economic and fiscal outlook report released last month states that:
while the medium-term outlook for the PNG economy is positive, gross  domestic product growth is being revised down from 4.3 per cent to 2.2;’
non-mining GDP growth is expected to be 2.6 per cent compared to the original estimate of 3.2;
exchange rate is expected to weaken against the US dollar by 9.1 per cent;
inflation to increase from 5.7 to 6.6 per cent.
Pruaitch said capital expenditure totalling K649 million and operational expenditure of K278 million would be cut.
Heading the list of capital expenditure is K45 million for Tourism Infrastructure Programme,  K40 million for the Bougainville Special Interventions Programme, K32.6 million for infrastructure development grants, K27.7 million for agriculture and SMEs, K25 million for prime ministerial commitments, K25 million for the Highlands Highway, K20 million for New Britain Highway, K17.7 million for Stret Pasin Retail Incubation Programme, K17 million for rural electrification, K16 million for the memorandum of agreements and K15 million each for the Boluminski and Hiritano highways.
Operation expenditure to be cut include K142 million for Finance and Treasury miscellaneous, K48.7 million for Works and Implementation, K10.6 million for the Department of Education, K10.5 million for the Department of Prime Minister and NEC, K9 million for Department of Lands and Physical Planning, K8.8 million for Department of Treasury, K6.1 million for PNG Customs Service, K4.1 million for Department of Industrial Relations, K3.1 million for provincial treasuries, K2.5 million for Department of Foreign Affairs and Trade.