NEWS DESK | Radio New Zealand | Edited
PORT MORESBY - Papua New Guinea is in an "increasingly fragile fiscal position" and an "economic hole", according to PNG's new Treasury Minister Ian Ling-Stuckey.
The precarious situation was revealed by a check of the government's finances by treasury and economic officials.
"For some years, there have been concerns about PNG's budget, debt levels and national account figures,” Mr Ling-Stuckey said.
“In this context, I have been a strong advocate of actions to address PNG's rapid blow-out in public debt, actions to fix our foreign exchange crisis which is seriously damaging businesses, actions to stop the decline in PNG's economic governance position, and actions to stop the deterioration in living standards for most people in PNG."
A due diligence team, including officers from Treasury, other economic ministries and my economic team, worked tirelessly for seven days to provide a new view of our economic situation. This was tough work and ruffled a few feathers, but it was important work for the country.
"The due diligence view included modernising to international standards the way we measure public debt and GDP. The due diligence review also put the priority on taking a realistic rather than an optimistic view of likely revenue and expenditures in 2019."
Mr Ling-Stuckey said figures established by the check and confirmed by the International Monetary Fund (IMF), supported the prime minister's appraisal that the PNG economy had been "struggling and bleeding".
"Unfortunately, but not unexpectedly, the due diligence work identified that PNG's budget position was in an increasingly fragile fiscal position compared to July's 2019 mid-year economic and fiscal outlook," he said.
"When informing my colleagues, they appropriately wanted another perspective to confirm the due diligence outcomes.
“With the IMF already undertaking a review of PNG's budget, the IMF were given access to the due diligence findings.
"Unfortunately, these new figures confirm that as our Prime Minister has accurately stated, the PNG economy has been "struggling and bleeding".
Blaming mismanagement by the previous government, Mr Ling-Stuckey said bad news was coming in the form of cuts to government programs.
"Based on these findings, I must let the people know that the budget prospects for 2019 are extremely difficult.
"As already foreshadowed by the prime minister, there is bad news coming. There will be cuts to programs such as DSIP and PSIP [ district and provincial services improvement programs]," he said.
"I and the prime minister's team of economic ministers are focused on looking forwards and finding solutions. We must start taking steps to climb out of the economic hole."
The Treasurer said he was now seeking international finance and would soon launch wide ranging consultations to solve PNG's economic woes.
"Over the coming weeks, I will be consulting widely with other colleagues, the business community, community groups and churches on their views for moving forwards. I am exploring urgent options to bring relief to cash flows and foreign exchange shortages.
"The final step in this first part of the budget repair process will be a supplementary budget presented to parliament on 8 October."