Next year’s budget will be funded from debt, says economist


November 19, 2021 - The National 

INSTITUTE of National Affairs (INA) executive director Paul Barker says the 2022 National Budget, estimated to be around K22 billion, will be mainly funded from debt.

He said the challenge for the Treasurer would be to manage the budget firmly and not give in to pressure from political colleagues eager for major allocations for often low-priority, political, poorly-supervised projects and expenditure.

Treasurer Ian Ling-Stuckey is expected to table in Parliament next week the 2022 Budget.

“Accountable and people-centred government should be the core of the 2022 Budget, ensuring spending goes to the real priorities, including basic access and services, that accountability mechanisms are strengthened to minimise waste,” Barker said.

“This also includes reinforcing the Auditor-General’s office and other watchdogs, and that those state-owned enterprises and authorities, which do not generate real revenue, but are really just rent collectors, such as Kumul Petroleum and NFA (National Forest Authority), pass on their proceeds directly to consolidated revenue, rather than running their own parallel budgets, looking for new ways to spend public money as if they’d earned it themselves.

“The various development partners have been generous in providing substantial low interest and long-term loans that have kept debt servicing costs down, and been able to displace some higher cost commercial borrowing.

“It is crucial that higher cost borrowing is limited and the debt servicing costs are restrained and debt levels not forced up unnecessarily for frivolous, wasteful and unaccountable activities.”

Barker said it also required that PNG should maintain credibility with its official lenders “if it is to be able to continue to access low cost finance”.

“It is particularly critical to take all measures to restore business and investor confidence, to encourage needed investment and job creation,” he said.

“The economy has had six years of very poor economic performance with low or negative employment growth.”

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