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Funding commitment set at $132 million

By Frank Senge Kolma PORT MORESBY, Papua New Guinea (The National, Sept. 20, 2011) – Almost half of the supplementary budget to be handed down today will go to education, Papua New Guinea’s (PNG) Minister for Finance and Treasury Don Polye said last night. While not giving figures, Polye said the balance would be taken up by infrastructure and institutional capacity-building. The total supplementary bud­get has been put at 800 million kina [US$353 million] in recent public announcements by the prime minister while the commitment to free education has been set at 300 million kina [US$132.3 million]. Polye said rural infrastructure, particularly in the liquefied natural gas (LNG) areas, would receive the next biggest slice of the supplementary budget.

[PIR editor’s note: O'Neill announced plans for "free education" as a means of assisting students as future leaders, but also in the hopes of addressing problems faced by teachers nationwide, like appropriate classrooms and resources, along with teacher housing. The education plan as it stands is hoped to use educational opportunities and advancements for younger generations of PNG's population as "an investment in the future, not a waste of money," according to O'Neill. The move for free education has been criticized for the massive funding it will receive, but has also been applauded for attempting to subsidize public education.]

The government hopes to also provide funding to strengthen one or two institutions which might relate to commitments the prime minister had made recently to the University of Papua New Guinea (UPNG) and Unitech. Polye said the biggest challenge for the government at the moment was to spend within its means, to keep inflation low and empower local businesses to flourish and drive the economy.

Inflation, currently at 9 percent, threatens to rise to double digit figures because of the heavy spending during the construction phase of the LNG project. Increased spending by government, coupled with low capacity in the economy to absorb inflationary pressures, can blow up inflation. Polye said his department was in constant dialogue with the Central Bank to ensure that inflationary pressures were capped at below ten percent and that the kina value was maintained at a stable rate.

[PIR editor's note: In May 2011, while O'Neill was Treasurer, a boom in mining and petroleum developments around the country from the grand liquefied natural gas project was projected to provide an eight percent increase to the national economy, although inflation would remain high, slightly higher than eight percent. In July, the Asian Development Bank predicted that the PNG economy would increase 8.5 percent this year and experience moderate growth in 2012 around 6.5 percent. The Bank noted that proper fund management, fiscal and monetary harmony and efficient import and transport of commodities and construction supplies would need to be acted upon by PNG.]

Parliament is expected to meet for a full week before adjourning for the budget session in the second week of November. Major legislations such as the bills on reserved seats for women and the declaration of Hela and Jiwaka as new provinces are not expected to be tabled at this sitting. The women’s bill must meet the two-month statutory requirement before it is next presented. So it is expected to be presented during the budget session. The bill on Hela and Jiwaka is also expected to be presented at the same session because the electoral boundaries committee has just returned from the two regions.

[PIR editor’s note: The Opposition leader in PNG's parliament put forth his support for a bill to reserve 22 seats in parliament for women representatives.]

Sir Michael Somare, disqualified as a parliamentarian during the Sept 6 sitting, and who is presently challenging that decision in the National Court, will be absent. Polye said last night the 2012 budget was also ready despite the interruptions brought on by recent political events. The budget would also see heavy spending on education, infrastructure and capacity building with the same challenge of keeping a tight cap on inflation.

His big challenges during election year included ensuring that PNG lives within its means, that it kept to its medium-term plans, its strategies and its Vision 2050 and, at the same time, ensuring that there was a positive return on every investment, he said.

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