PNG's Revenue to remain still despite growth
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| Port Moresby Central Business Center |
The Pacific Economic Monitor released yesterday indicated that the government revenue will grow by 4% per annum over the next 3-years.
It said that was due to declining global commodity prices, slowing domestic business activity and falling output from existing mining and oil operations.
This is well below the revenue growth experienced between 2010 and 2014, which averaged over 15% per annum.
To eliminate the budget deficit and achieve fiscal balance by 2017, the government therefore plans to cut total expenditure by 6% in 2016 and 2017.
“Achieving these targets will be challenging, but budget consolidation is vital for restoring fiscal buffers and ensuring the economy can weather adverse global economic shocks. It presents a valuable opportunity to re-focus efforts on improving the quality and impact of public expenditure,” said ADB PNG country economist Aaron Batten.
He said government funding for key development pillars of health, education, law and order and infrastructure has increased by more than 400% between 2007 and 2014.
Batten said the government’s ability to ensure these funds are used well will be enhanced without the added pressure of further spending increases.
“Improving the capacity of public sector agencies to translate budget allocations into infrastructure and service delivery will be a core part of this challenge.
“Particular emphasis will need to be placed on performance accountability as well as training the appropriate mix of skilled civil servants to prepare, deliver, and maintain new assets,” he said.
According to ADB, development partners have an important role to play by ensuring their financial resources are predictable, transparent and aligned with government priorities.
This can help the government to prepare more accurate medium-term investment plans, encourage better project preparation and more effectively support government agencies to invest in skills development
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