Showing posts with the label FRAUDULENT

PNG Economy – Forecasting Confusion Undermines Confidence but RECESSION CONFIRMED

by P AUL FLANAGAN Executive Summary The 2017 Budget was a missed opportunity for restoring credibility in the Government’s economic management. Vastly different measures for GDP are included throughout the same Budget document – not a good look for international investors and credit rating agencies LNG values are assumed to increase in the 2017 Budget by 16% while recent World Bank forecasts indicate a fall of 35%. Using official BPNG figures, and updating them for the lower growth forecasts in the 2017 budget, a recession is confirmed: (using the measure most relevant for measuring progress on PNG’s living standards) real non-resource GDP per capita is expected to fall from K2,479 in 2013 to K2,282 in 201 7 this is a fall of 8% in average living standards in PNG. According to official estimates from Treasury and BPNG, it will now take until past 2023 to get back to 2013 standards of living (see graph below).  PNG is officially facing another lost decad


by PAUL FLANAGAN   PNG’s 2017 budget was a key opportunity to demonstrate the credibility of the government’s economic management before next year’s election.  It fails. Foolish games with numbers and unrealistic assumptions severely undermine the budget’s credibility (detailed examples on the revenue and expenditure side are provided below). Indeed, the level of deception arguably approaches fraud. This preliminary assessment of the budget documents will be updated over the next few days.  Hopefully more good will be found in the detail. A major winner from the budget are overseas petroleum shareholders with proposed cuts in the company tax rate from 45 or 50% down to 30%. This will be of particular joy to Oil Search and others that will gain from a new possible Papua LNG project – but they are possibly accessing the lower rate for condensate already. PNG’s tax regime for the petroleum sector was already considered generous relative to world standards – it now will be even