Fiscal discipline lacking as PNG embarks on spending spree
20 November 2013
MARTYN NAMORONG | Namorong Report
YESTERDAY’S PAPUA NEW GUINEA BUDGET was very difficult for me to swallow. Yes teachers get a pay rise but the government’s party-boy behaviour means they’re going to fuel inflation and further drive down the kina.
You may not have heard of the Alotau Accord – it was the shopping list of ‘what I wants’ made by the culprits who put the O’Neill-Dion government into power.
Treasurer Don Polye did not mention the Alotau Accord in his budget speech but this budget reeks of it and is bound to add downward pressure on the PNG economy.
Now all those MPs are counting their chickens as the eggs hatch at the expense of the people of Papua New Guinea.
Despite the government's rhetoric that the 2014 Budget would be tight, we see are seeing a major fiscal expansion that has produced a record K15 billion budget with a deficit of K3 billion.
This budget is a cheap bottle of cabernet sauvignon that tastes disgusting but will make the economic party drunk. And yes they’ve added 35% alcohol aka national debt.
Key facts about the budget
It forecasts spending of K15 billion.
Government revenue is estimated to be K12 billion.
The government will borrow K3 billion to plug the hole.
The government’s deficit spending has brought national debt to 35% of GDP.
It now proposes to move the goal posts, that is, amend the Fiscal Responsibility Act to allow borrowing above the legislated debt ceiling of 35% of GDP.
The bottom line – this budget will suffocate the economy and increase government borrowing domestically crowding out the private sector.
To ensure that the financial institutions toe the government’s line, like the threats to the media the Treasurer has announced there will be a review next year of the financial sector in PNG. How convenient, especially when the government will be borrowing from the same banks and financial institutions it will be reviewing.
Don’t believe the public relations spin about liquefied natural gas revenues. The people (or sheeple) will have to wait until the end of next year for LNG revenues to flow. In the meantime they will have to suffer the consequences of the high cost of living during the months in between. And it’s all artificially created by the O’Neill government.
Last year I travelled through the Sepik seeing people dispossessed of their customary land. Today in parliament, Treasurer Don Polye announced funding for the creation of the Sepik Plains Special Economic Zone.
Forget Vision 2050 and the national strategic plan or even common sense for that matter. The Alotau Accord is the root of the problem.
Papua New Guinea’s predatory elite are having a field day whilst I see workers walking like zombies to and from work – each day having the life sucked out of them.
Pathetically this seems to be the only thing deputy opposition leader Sam Basil noticed when he tweeted:
Thanks Martyn.A crying shame. A review of the financial sector next year? Now that sounds scary to me.
Posted by: Marjorie Andrew | 20 November 2013 at 09:59 AM