Stick to fiscal and debt guidelines, says council

THE PNG Business Council (PNGBC) has cautioned the government to adhere to fiscal and debt guidelines for economic stability to be maintained and expenditure focused on real priorities.
PNGBC vice-president Gerea Aopi said when trust funds were drawn down and other revenue sources became tight, the government needed to prudently manage expenditure.
“This is particularly so in the run-up to the 2012 general election for economic stability to be maintained,” he told business council members at breakfast yesterday.
Aopi, speaking in his capacity as PNGBC acting president, later re-elected as vice-president, said this would require adherence to fiscal and debt guidelines, avoiding the temptation to borrow in advance of future forecast revenue.
“This will also require cooperation with the Central Bank and also close consultation, cooperation and confidence from the private sector and the wider community.
“Foreign exchange reserves are likely to fall substantially as the PNG liquefied natural gas (LNG) and other major projects are developed, and inflationary and other risks remain strong,” Aopi said.
“We must recognise the challenges if we are to safeguard all sectors and ensure broad-based growth of employment and income opportunities, rather than narrow-based growth in a few enclave enterprises, but contraction in agriculture and other critical industries.”
Aopi ,who is the executive director and general manager of Oil Search Ltd, stressed that among others, focus must be given to ensuring that the government undertook its responsibilities effectively and diligently to ensure major projects, notably the LNG, proceeded smoothly without delays and minimising the distortionary effects of the major projects.
“When LNG production proceeds from 2014, measures must be in place to minimise the Dutch disease, notably inflationary pressures and undue currency appreciation.
“A well managed and transparent sovereign wealth fund or funds must be established for stabilisation and savings, and operating under firm objectives and operating guidelines, recognising that until LNG production proceeds in 2014 or about 2017 for taxes,” he added.