State warned on relief

By DALE LUMA
GOVERNMENT efforts to financially assist businesses and families hit hard by the Covid-19 crisis will go to waste if there is no updated data on those most at risk, an economist says.
Institute of National Affairs executive director Paul Barker told The National that the Government needed to identify first who needed help the most.
“The trouble is that many of the micro-enterprises do not have formal sector bank accounts, and there is also no established social protection or public welfare system in PNG,” he said.
“So the Government neither has the data on the prevailing micro-enterprises and households, nor the established government of banking mechanisms through which to provide relief.
“Details of the number of businesses, employees, households and the level and nature of impact is vital to ensure that the level of intervention by the Government is well targeted and not wasted.”
He suggested that the government: assess the scale of the issue and developing mechanisms to help keep businesses afloat, without the State bearing an undue burden or taking responsibility for businesses that were failing anyway providing micro-enterprise and household relief; identify the most-at-risk.
The Treasury Department yesterday released money plans recently approved by the National Executive Council as part of its economic stimulus package, including K600 million for the health, security and economic sectors. Treasurer Ian Ling-Stuckey recently said the Government had managed to raise K1 billion from bond financing with the help of local financial institutions.
It needs to raise another K1.5 billion. Barker however warned the Government against “over-borrowing at this stage”.
“Treasurer (Ling-Stuckey) recently announced an extensive set of economic measures to address the impact of Covid-19 on the economy including domestic and international borrowing,” he said.
“The broad brush of the government support was spelt out by the Treasury in Parliament in March.
“He indicated that many of the details were still in the process of being prepared, both the amounts entailed and the delivery methods.
“Nevertheless, with a range of businesses and households prevented from earning incomes, the Government has a responsibility and is the only party with the capacity to secure and provide funding at this difficult time. This includes through raising debt levels above ceilings considered advisable and effectively printing some money, where the lenders are unavailable (or unaffordable), notably through the widely practised mechanism, generally to be avoided, called quantitative easing.”
He stressed that it was critical updated details were available on the impact to date.
He also warned that the Government should ensure that its expenditures “are also justified and accountable”.