IMF Country Report Commends Government Efforts and 100 Day Plan – Positive Outlook for Papua New Guinea in 2018
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| Port Moresby : Photo by 02 Photography PNG |
Minister Abel further highlighted the positive growth projections for the National economy through 2018, particularly as Papua New Guinea hosts APEC under the Chairmanship of Prime Minister O’Neill.
Referring to the latest IMF Country Report, Minister Abel said the Government, working through the Department of Treasury, has seen increased engagement with development partners including the IMF who provide important economic advice and support.
“The Article IV Report is frank in acknowledging the challenges facing the PNG economy but is predicting improvements in 2018 on the back of a 2.4% growth in GDP, up from 2.2% in 2017,” the Acting Prime Minister said.
“The IMF recognises that this outlook does not factor in any of the emerging resource projects such as the Papua LNG, PNG LNG Project expansion, Stanley Gas, Wafi Golpu or Frieda River.
The IMF Country Report stated:
- The authorities are making bold spending reductions to contain public debt at prudent levels and remain committed to a credible pro-growth consolidation path over the medium term.
- Authorities upon moving into office in July passed a 100-day Plan. To date, the Plan has accomplished its macroeconomic stabilization objective with the passing of the 2017 Supplementary Budget in September.
- The Supplementary Budget took bold measures to narrowing the fiscal deficit.
- On wage bill control, the Supplementary Budget efforts included commencement of physical audit into the payroll, a freeze on new recruitments, ceasing use of the parallel payroll system and migration of all government employees onto the centralized government payroll and to have a national identification card, as well as, identifying list of offices and agencies for amalgamation in 2018.
- At the same time, to protect critical development spending on education, health, infrastructure, including law and order during protracted economic cycles, authorities have also amended its Fiscal Responsibility Act (FRA).
- The single target public debt to GDP ratio of 30 percent ceiling is replaced with a public debt to GDP range of 30-35 percent, targeting an average annual non-resource primary fiscal balance of zero over the medium term.
- Furthermore, authorities have also announced its new Medium Term Fiscal Strategy (MTFS), promoting revenue mobilizing and spending reduction to manage public debt at prudent levels.
- The 2018 Budget—the first budget under the new MTFS—has lifted capital spending, and involved the difficult task of reprioritization and reallocating limited public spending to higher value priorities that will enhance overall economic growth and still achieve strategic development goals over the medium term.
The Acting Prime Minister also noted that the IMF has highlighted some of the challenges and opportunities facing the economy.
“When it comes to monetary policy and foreign currency, the culmination of global commodity price slumps and domestic pressures including serious drought, as well as the end of the construction phase of the PNG-LNG project have induced challenges.
“At the same time, the IMF acknowledges the strength of the Nation’s financial institutions and their prudent balance sheets, that has contributed to the resilience and positive growth of the economy in the face of global slowdowns.
“The risks associated with sustainable debt levels and financing our deficit budgets is noted, whilst the report also notes Papua New Guinea’s continuing relatively low debt to GDP levels compared to other countries.”
Minister Abel further highlighted the ongoing co-operation and productive working relationship Papua New Guinea has with the IMF that is delivering tangible outcomes for the economy.
"The IMF has worked with our officials to develop the new Medium Term Revenue Strategy, and we have asked for support in developing a Medium Term Monetary Strategy.
“I'm pleased the IMF is constructively engaging with Papua New Guinea and is understanding our efforts to address the short and longer term issues on our path to a self reliant, sustainable and wealthy country.
“We are very clear about the aspirations we have for our Nation, and to achieve these outcomes we must listen to and rely on frank and sound advice from experienced institutions such as the IMF.
“The economic governance of our country relies on drawing not only from our own knowledge and experience, but from the development experience of economies who experience similar challenges and opportunities."
The Deputy Prime Minister emphasised that economic prospects for the economy are positive, and will be further boosted as Papua New Guinea hosts APEC throughout the year.
“Through 2018 and beyond, with the rebound in resource prices, and as we move towards the construction phase of the Papua LNG project, we can be confident but we must also continue to exercise discipline starting with the delivery of the 2018 Budget.
“The 2018 year will be very important for Papua New Guinea as we host more than fifteen thousand delegates, Ministers and Leaders from the APEC region.
“Our Prime Minister, Hon. Peter O’Neill, is now the Chair of the APEC process for the year, and will provide strong leadership as the region’s policy agenda evolves through 2018.
“APEC provides an opportunity to showcase the trade and investment potential of Papua New Guinea, while provides our economy with the opportunity to make a positive contribution to regional economic growth and development.”
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