Treasury: LNG proceeds won’t impact in leaps and bounds

DESPITE all the hype, proceeds from the liquefied natural gas (LNG) project will not impact the economy significantly in the short to medium term, according to the Treasury Department.
The economy will continue to grow between 2013 and 2016 but not in the “leaps and bounds” fashion many associate with the advent of the first gas in 2014.Total revenue is projected to grow from K8.9 billion next year to K11.8 billion in 2016.Recurrent expenditure is projected to grow by K1 billion a year from K6.06 billion next year to K9.15 billion three years later.Development expenditure – that money to develop the country – will actually be stagnant over the period and indeed will recede. Anticipated development expenditure for 2013 is K4.29 billion. Come 2016 this expenditure will be only K4.1 billion.A paper was presented recently by Nancy Lelang, acting assistant secretary for the forecasting branch of the Economic Policy Division.
The outlook for government’s total revenue is to remain stable over the indicates that mining revenues are likely to decline with the forecast closure of Ok Tedi in 2015. She said the first lot of the PNG LNG project dividends which are expected in 2015 are only “sufficient to replace the Ok Tedi mine and the depleted oil field revenues”.PNG will continue to depend on grants to the tune of K1.2 billion over the next three years.
It is critical that government expenditure be kept stable in line with projected revenue over the medium term.
Any uncontrolled spending by the incoming government this year will impact significantly in future.
Government expenditure is expected to be stable in line with projected revenue over the medium term.
This is the scenario before budget strategists as they await NEC approval of a budget strategy paper and agencies’ submissions to prepare the budget.