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Showing posts with the label economic failure

PNG FISCAL WOES - WHERE IS ALL THE MONEY?

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by STEPHEN HOWES - DEVPOLICY BLOG There are widespread reports these days from Papua New Guinea of budgetary difficulties, from budget cuts to  church health services  to  government salary payment delays . Why? Total expenditure is budgeted in 2016 to be slightly below the 2015 level. But it is still 50 per cent above 2012 levels. (With the change in accounting rules, it is difficult to make comparisons going back before 2012.) That’s massive growth. So what is the problem? There are three. The first is a big shift in allocations. Since 2012, there have been big increases in interest payments (due to increased borrowing), payments to MPs through district and provincial funds, payments to schools (in lieu of school fees), and compensation to employees. Deduct these and there is an 18 per cent increase in spending compared to 2012 to fund everything else, which includes critical things like maintenance and church health spending. That’s the “discretionary spending” shown in Tab

MOODY'S PLACING PNG B1 GOVERNMENT RATINGS ON REVIEW FOR A DOWNGRADE- PANIC STATION

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by MOODYS CREDIT RATING Moody's places PNG's B1 government ratings on review for downgrade Global Credit Research - 25 Feb 2016 Moody's Investors Service ("Moody's") has placed the Government of Papua New Guinea's ("PNG") B1 local currency and foreign currency issuer ratings on review for downgrade. The review for downgrade is driven by: 1. The impact of the further fall in oil prices on government revenue, fiscal deficits and rising debt; and 2. A likely structural shift to lower economic growth given the increasingly uncertain outlook for commodity-related investments. RATINGS RATIONALE RATIONALE FOR THE REVIEW FOR DOWNGRADE FIRST DRIVER - DETERIORATING FISCAL AND DEBT METRICS Lower oil prices and weather-related disruption to gold production led to weaker-than-expected revenue in 2015, and we expect pressures on revenue to continue through 2016. Although expenditure cuts in 2016 have been announced in respons