PNG Economic growth slows down

Papua New Guinea Economic growth slowed down this year and the Government has been urged to focus on priority areas such as infrastructure, education and health. 

The Bank of PNG in its September monetary policy statement released by Governor Loi Bakani said the Government should ensure the wider population and businesses “take advantage of the infrastructure development to market their products”.

Bakani attributed the decline in growth to the dip in the mining and manufacturing sectors as a result of lower commodity prices.

It also blamed government spending plus the adverse impact of the El Nino conditions.

“With lower international commodity prices including oil and the temporary shutdown of the Ok Tedi Mine, Government revenue is significantly lower than budgeted and will impact on public spending,” Bakani said.

He said the preliminary outcome of the fiscal operations of the Government over the six months to June 2015, showed   an overall deficit of K942 million compared with K563.6 million in the corresponding period in 2014. “This represents 1.8 per cent of the nominal GDP. The Government has announced its plan to introduce a supplementary budget consistent with significant lower revenue in 2015 that would yield a deficit budget,” he said.

“This will assist in reducing financing pressures and interest cost.”

He said to increase revenue and help address the recent low flow of foreign exchange inflows, the Government should consider amending the tax concession policies, including terms of tax holidays given to resource projects.

“This includes reducing concession or allowing companies to pay their tax obligations in foreign currencies before any concession are given in kina.”