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PNG’S FIENDISH FISCAL FIGURES – A HISTORICAL PERSPECTIVE

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by PAUL FLANAGAN Using PNG’s updated GDP numbers, there are new insights into PNG’s economic history. In particular, they show how bad the last four years have been: PNG’s budget deficits over the last four years are the worst in PNG’s history.From 2012 to 2016, deficits have totaled an extraordinary 23.8% of GDPThis is nearly three times higher than the next worst five-year period for spiraling deficits (8.7% from 1992 to 1996 with five-year periods based on parliamentary terms).

These daunting deficit figures are the driver behind the explosion in public debt from 17.3% of GDP in 2011 to 35.5% in 2016.In the 1992 to 1996 period, debt started at much higher levels (28% of GDP) but still didn’t reach 2016 levels (34.4% in 1996 vs the current 35.5% level using 2016 FBO numbers and IMF figures on 2016 GDP).There are two drivers for these historically high budget deficits.First, the massive increase in expenditure in 2012 was the largest in PNG’s history – and there was another substantial…

PNG – CHANGE NEEDED TO MEET PEOPLE'S POTENTIAL

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by PAUL FLANAGAN

Summary
PNG politicians are failing their people. Their poor policies have led to dramatic declines in economic well-being – an extraordinary fall of over one-third since 1980.
This is revealed by applying new numbers from the PNG National Statistics Office (NSO) and International Monetary Fund to PNG’s economic history.
From 2012 to 2017, under the O’Neill government, average economic well-being for the people of PNG has declined by 2.8%.
This reverses positive economic gains of 8.4% from 2000 to 2012.
PNG is returning to the poor economic performance it experienced during the 1980s and especially the 1990s – lost decades for development. This is a shame.
From 1980 to 2017, economic well-being in PNG per citizen declined by an extraordinary 40.4%.
This is a development failure.
In contrast, the resource sector has grown strongly.  It is now 48.1% larger per capita than in 1980. The resource sector boomed by 62% during the 1990s when the non-resource se…

AN INSIGHT INTO OUR BUDGET

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by M.V LASIA

PNG has recently made the headlines across the globe for being in a financial debt crisis and struggling to pay its debts and expenses.
It is no secret the O'Neill Government has had cash-flow crisis and only managing to keep its head above water.
What little tax income it earns each month is being used to ensure public servants are paid every fortnight and any difference is directed to propping up its free education policy and partly pay for its inflated contracts.
Meanwhile Peter O'Neill claims the country's financial crisis has been caused by dramatic fall in world commodity prices placing a strain on economies around the world.

So is Peter O'Neill telling the truth? Short answer is No. 
The PNG Government funds its operations, development projects and services its debt obligations through the collection of taxes and overseas grants (donor funding). Tax collection or revenue is categorized into three main parts.

1) Tax on Income and Profits (company, wag…

DEFICIT AND DEBT BLOW-OUTS CONFIRMED

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by PAUL FLANAGAN

The Final Budget Outcome provides surprisingly frank numbers on the O’Neill government’s inexcusably poor management of government revenues, expenditures and debt.

This document confirms a budget deficit and debt blow-out during 2016. PNG has never before -even during much worse falls in commodity prices – had such an appalling string of huge budget deficits.

The government has no credible path out of the budget mess. Deficit levels are getting larger, not smaller.

PNG Treasury states the debt to GDP ratio is 32.6% and so exceeds the 30% limit set out in the Fiscal Responsibility Act (and using the GDP series when this benchmark was created, it is now 42.7% of GDP).

As a result of the failure to manage this fiscal crisis, PNG’s debt in 2016 is 258% of its 2012 levels. This will be a painful legacy for  PNG’s future as little of the debt blow-out has been properly invested.

The 2016 Supplementary Budget assumed that revenues would increase by K928 million but the FBO i…

PNG Economy – Forecasting Confusion Undermines Confidence but RECESSION CONFIRMED

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by PAUL 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 agenciesLNG 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 7this 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 decade of development.Economic management …

PNG IS IN A ECONOMIC RECESSION - LEADING ECONOMIST

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PNGBLOGS

Papua New Guinea is in economic recession, according to leading Australian academic economist Paul Flanagan, who is an expert on PNG.

This is revealed in his analysis (at his www.pngeconomics.org blog) of the latest official numbers from the Bank of Papua New Guinea and the National Statistics Office.

The official numbers show Prime Minister Peter O’Neill, Treasurer Patrick Pruaitch and Finance Minister James Marape are telling lies when they say the economic is healthy and everything is under control.

Mr Flanagan says the recession began in early 2014, and the official numbers show that it is  continuing. This means Papua New Guineans’ standard of living has been falling since 2014.
In other words, O’Neill has wasted the riches flowing from PNG LNG and the three years of high GDP growth he experienced when he became Prime Minister.

Papua New Guineans are poorer today than they were at the start of 2014 because of O’Neill’s waste, corruption and mismanagement.

Flanagan estimates tha…

IMF OUTLOOK CONFIRM PNG GROWTH RATE IS 3.1% NOT 9.2% AS BOASTED BY O'LIAR

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by MICHAEL.J PASSINGAN

Last month Prime Minister Peter O’Neill publicly stated that the nation’s annual GDP growth rate is 9.2 percent.

He said Papua New Guinea’s growth rate is the envy of many world economies – “9.2% is miles better  than the global average, which is about 3 percent or less”.

That was untrue when he said it, and the Prime Minister knew it to be untrue. The growth rate for the year, according to the 2016 Budget, was 4.2 percent. But in fact PNG’s GDP growth rate at the time Mr O’Neill lied to the people was less than 4.2 percent.

Confirmation of that comes with the release yesterday of the IMF’s World Economic Outlook. That authoritative document estimates PNG’s annual growth rate this year is 3.1%. This is very bad news for Papua New Guineans.

It puts PNG’s GDP growth amongst the lowest in the world. But the accompanying graph shows that the situation is even worse than that. Under the corrupt, reckless and wasteful PNC Regime of Peter O’Neill, national GDP growth …

THE KING OF LIARS DOES IT AGAIN!

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byMICHAEL J. PASSINGAN

On 21 March, at the PNC fund-raising – also known as the greatest gathering of thieves on earth – the Prime Minister boasted about PNG having an annual GDP growth rate of 9.2%. He said Papua New Guinea’s growth rate is the envy of many world economies – “9.2% is miles better than the global average, which is about 3% or less”.

 LIES LIES LIES! 

PNG’s annual GDP growth rate is 4.3%, according to the 2016 Budget papers, Volume 1, Table 1, page 107. Even worse, Treasury predicts annual GDP growth to fall to less than 3% for 2017, 2018 and 2019, according to the 2016 Budget papers, Volume 1, Chart 13 page 12. 

This chart also demonstrates how O’Neill has wrecked the non-mining sectors – mainly agriculture, on which 90% of the people depend for their livelihood. His mad policies and his greed have reduced non-mining GDP growth from a high of 12% per annum in 2011 to about 3% per annum now. 

MORE LIES! 

He also told his dinner companions - PNC konman cronies and other thiev…

PNG's economy is a Greek tragedy in the making

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Race to recovery: poorer and younger people will be the losers from a sustained budget crisis.
by PAUL FLANAGAN
The past year has been a year of poor public policy and misfortune for Papua New Guinea. The country ended the year in crisis management with cash shortages and budget cuts more severe than those in Greece's austerity package. Businesses are suffering from a lack of foreign exchange to pay for imports and sales are falling. Newspaper stories are increasingly of government cash shortages – funding not being paid to meet urgent medical programs such as drug resistant TB, teacher entitlements being deferred, superannuation contributions not being deposited, little being done to deal with the most severe drought since 1997. The international ratings agencies of Moody's and Standard and Poor's have moved PNG to a negative watch.
This is a long way from the start of 2015 when the Asian Development Bank predicted PNG would…