Showing posts with the label FINANCIAL CRISES

PNG’s frightening Final Budget Outcome

by Paul Flanagan   PNG Treasury released last Thursday an update on what may really have happened with the 2015 budget. Like the mid-year Treasury MYEFO update, this is a frightening document that points to a collapse in government revenues of 20 per cent in 2015 relative to the budget, and reveals 2015 expenditure reductions of 37% in health, 36% in infrastructure and 30% in education, areas the government said would be protected. The combined budget deficits over the last three years of 24% of GDP are the largest for a three year period in PNG’s history. The Final Budget Outcome ( FBO ) is one of four key budget documents each year and must be released by 31 March. The 2015 FBO is a comprehensive document that fills in many of the gaps of the 2016 budget, including finally providing detail on where cuts were made in the Supplementary Budget. Key aggregates are shown below. Table 1: Fiscal aggregates from the 2015 Final Budget Outcome (FBO) Note: These fi


by SIR MEKERE MORAUTA   Papua New Guinea needs to take urgent action to save itself from a looming economic and financial storm, former Prime Minister Sir Mekere Morauta said today. Sir Mekere, an economist and former head of Treasury, the Bank of Papua New Guinea and other institutions, said the nation cannot continue on its present course. “The Prime Minister has had plenty of warning from his own expert advisers in Treasury and from eminent foreign institutions and observers,” Sir Mekere said. “Good senior people in Treasury have been side-lined or sacked, or shipped out if a foreigner. Anyone who raises concerns suffers personal attack from the Prime Minister. “Or, as with the peaceful protestors who gathered at Unagi Oval on 26 October, being set upon and bashed up by the Police, no doubt on orders from above. “He has ignored all advice, and now the nation is suffering the consequences.” The latest warnings come from the international ratings agency Standard & Poor’s (S

PNG – Pathways from Potential Crisis

by PAUL FLANAGAN Potential crisis – what does this mean? • 3 types of crisis observed in countries through time (talk will focus on first, and some comments on second) • Fiscal crisis (PNG – first and second 1990s crises) • Government runs out of money to pay its bills. • Potentially manifested by shortage of government cash, ‘out of the ordinary’ borrowings, printing money, much higher government security interest rates. • External crisis (PNG – first and second 1990s crises) • Running out of foreign currency to pay bills (either private or more particularly government) • Potentially manifested by various forms of exchange rate controls, tariffs and quotas, foreign currency borrowings. • Muddling down crisis (more African and South American examples) • Pattern of continuing poor decision making undermining sustainable growth. • Medium to long-term timeframe – a slow bubbling crisis that may extend over a decade. • Potentially manifested by pattern of poor eco