PNG Government Proposes $4 Billion Budget; Spending To Still Exceeds Revenues

Cuts in projected spending to prevent a 'budget blowout'

By Jeffrey Elapa

PORT MORESBY, Papua New Guinea (PNG Post-Courier, Nov. 2, 2016) – The 2017 Budget expenditure remains at K12,965.4 million [US$4.03 billion] compared with K13,834 million [US$4.30 billion] in the recently passed 2016 Supplementary Budget after K928 million [US$288 million] was cut to prevent a budget blowout.

Treasury Minister Patrick Pruaitch said the K1.1 billion [US$342 million] reduction in expenditure in 2017 was necessary to maintain overall debt at a sustainable path through a budget deficit of 2.5 per cent, or K1,875 million [US$582 million].

Overall debt to GDP will remain at 28.8 per cent, similar to 2016 Budget, with the risk that a further revenue shortfall could take it over the legislated 30 per cent limit.

The 2017 Budget would maintain the Government’s expenditure strategies, as reflected in previous budgets while all Government priority areas, including health, education, infrastructure and provincial and district level expenditures, would remain.

The provinces receive K3605.7 million, [US$1.12 billion] or 27.8 per cent of the total budget, which is the largest share of the total budget. Major appropriations include PSIP K220 million [US$68 million], DSIP K890 million [US$276 million], LLGSIP K32.2 million [US$10 million] and Ward K61.8 million [US$19.2 million], meaning each ward will receive K10,000 each [US$3,105].

The Administration Sector receives K2732.3 million [US$848.3 million], or 21.1 per cent of the total budget, which is the second largest share of the budget. Major projects include hosting of APEC K250 million [US$78 million], 2017 National Election K400 million [US$124 million], public debt interest expenditure K1316.9 million [US$408.9 million], superannuation K272.0 million [US$84 million], public service retrenchment K20 million [US$6.2 million] and office accommodation K78 million [US$24 million];

The Health Sector receives the third largest share of the total budget of K1221.2 million [US$379.2 million] or 9.4 per cent. Key expenses include free health care K20 million [US$6.2 million] and medical supplies procurement K160 million [US$50 million];

The Education Sector receives the fourth largest share of K1162.5 million [US$361 million] or 9 per cent. This includes tuition fee free policy K602 million [US$187 million];

The Law and Order Sector receives the fifth largest share of K1124.01 million [US$349 million], or 8.7 per cent. This includes Waigani Court House Complex redevelopment K80 million, police housing project K2 million [US$621,000], police modernisation K15 million [US$4.7 million], and Defence infrastructure K5 million [US$1.6 million].

The Transport Sector receives the sixth largest share of K897.15 million [US$278.6 million], or 6.9 per cent. This is a 12.5 percent reduction from the 2016 Supplementary Budget;

The Economic Sector is allocated K398 million [US$124 million], Community and Culture Sector K204.6 million [US$63.5 million] and Utilities Sector K223.2 million [US$69.3 million].

These appropriations reflect the Government’s commitment for policy priorities and broad based economic growth. The 2017 Budget does that by making positive long-term choices that will further strengthen our economy and our communities into the future.

Mr Pruaitch said the Government intends to move the debt to GDP ratio onto a sustainable path while supporting development.

“The deficit of K1875 million [US$582 million] equates to 2.5 per cent of GDP. The Government debt profile will be managed strictly using a range of financing instruments, including the potential issuance of a Sovereign Bond to ease pressure on the domestic debt market,” he said.

PNG Post-Courier
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