PNG REPORTS $141 MILLION BUDGET SURPLUS

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PORT MORESBY, Papua New Guinea (PNG Post-Courier, Sept. 28) – The Bank of Papua New Guinea (BPNG) has urged the Government to fast-track the implementation of major development policies after recording another budget surplus.

According to the central bank’s Quarterly Economic Bulletin, there was continued economic activity in the first half of this year due to high commodity prices on the international market and an increase in Government expenditure and commercial bank lending to the private sector.

Consequently, the continuing high in export prices has resulted in a surplus in the Government’s fiscal operations and balance of payments.

"The overall surplus in the balance of payments was PGK400 million [US$141.2 millioni] for the first six months of 2007, compared to a higher surplus of PGK675 million in the corresponding period of 2006.

This outcome was the result of a lower surplus in the current account, which more than offset an improvement in the capital and financial accounts. The current account recorded a surplus of PGK304 million in the first six months of 2007, compared to a surplus of K1,059 million in the corresponding period of 2006. This outcome was the result of a lower trade account surplus, combined with higher net service payments, which more than offset lower net income payments and higher net transfer receipts," stated the BPNG report.

Normally conservative in expressing opinion on issues relating to the Government-of-the-day’s development agenda, the BPNG said the building up of fiscal surpluses marked a good time for the Government to fast-track the implementation of major policy decisions highlighted in its medium term development strategy (MTDS).

"In view of the fiscal surpluses, the Government should fast track the implementation of major development policies contained in the Medium Term Development Strategy as well as removing impediments to investments in order to broaden the economic base and sustain higher economic growth," the bank added.

On the country’s gross foreign exchange reserves, the central bank said it was PGK4,725.4 million at the end of the June quarter, which was sufficient to cover 7.6 months of total and 10.4 months of non-mineral import cover.

Preliminary estimates of the fiscal operations of the Government over the six months to June this year showed an overall surplus of PGK420.6 million, compared to a surplus of K363.0 million in the corresponding period last year.

This represents 2.4 per cent of nominal GDP.

The surplus resulted from higher revenue, which more than offset an increase in development and recurrent expenditures," the bank said.

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