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PNG'S BUDGET DEFICIT IS AT LEAST K1 BILLION GREATER - CHARLES ABEL LIED THROUGH HIS TEETH

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by PAUL FLANAGAN
Deputy Prime Minister and Treasurer Charles Abel’s credibility was on the line. Did he actually deliver on the 100 Day Plan promised reduction in PNG’s 2017 budget deficit from unsustainable levels?

The answer is almost certainly “no”. The actual 2017 budget deficit is conservatively estimated at over K1 billion larger than claimed – largely due to not paying bills or GST refunds. The conservative estimate would lift the size of the 2017 Budget deficit from 2.4% to just under 4% of GDP. However, the upper bound deficit estimate is K2 billion larger – or more than double – the K1.8 billion budget deficit reported in the 2017 FBO.

Even a 4% outcome would have better than the budget deficits of 2014 to 2016. However, the reductions were made in the wrong way. Expenditure was cut entirely in areas key for PNG’s future growth and concessional loan projects were delayed. Even using FBO figures, the blow-out in operating expenditures entirely consumed the claimed increase in…

2017 BUDGET BLOW-OUT

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PRESS RELEASE by Rt. Hon SIR MEKERE MORAUTA MP

Former Prime Minister and Member for Moresby North-West Sir Mekere Morauta said today that at last some members of the PNC Government have admitted that the Papua New Guinea economy is in difficulty.  Sir Mekere referred to the media statement by Deputy Prime Minister and Caretaker Treasurer Charles Abel, who said that the focus of the government in its first 100 Days would be on “economic recovery”.

Sir Mekere noted that this was an interesting admission and use of words by Mr Abel, because the Prime Minister has consistently refused to recognise that the economy is in recession, and has mismanaged public finances in such a way that has allowed the recession to intensify.
“My advice to Mr Abel is that before he launches into any “recovery” measures, he needs to repair the budget and reform his Prime Minister and curb his extravagant and uncontrolled spending and borrowing,” Sir Mekere said.

“The non-mining sector, on which the majority o…

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…

A DESPERATE TURNBULL STANDS BY A WEAK DESPOT

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by PETER J RICKETS

April is proving to be the most disastrous month in the history of Australia’s relationship with Papua New Guinea, with yet another crisis in Malcolm Turnbull’s concentration camp on Manus Island, to the north of the PNG mainland. At a time when the West is struggling to win the hearts and minds of Papua New Guinea in the face of a concerted Chinese diplomatic effort to do the same, Manus has once again blown up in Australia’s face.
This week’s riot during which PNG Defence Force personnel fired approximately 100 rounds from military weapons into the refugee compound has created even more animosity towards Turnbull’s Australia. The compound is supposed to be officially closed, but still houses hundreds of refugees, with Turnbull and his Immigration Minister washing their hands of any responsibility for it and its occupants. Infuriated by the continuing Turnbull-Dutton deceptions and their attempts to slither away from Australia’s responsibilities, Papua New Guineans …

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…

BASET O MONI PLEN BILONG PAPUA NIUGINI EM INO MO STRET

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by PAUL FLANAGAN

2017 baset bilong PNG i bin wanpela ki taim bilong gavman lo soim kredibiliti bilong em long we em i bin manesim ekonomi bipo long ileksons neks yia 2017. Em i fail long soim dispela kredibiliti bilong em.
Ol faul gem wantaim ol namba na ol giaman ges i bagarapim turu stron bilong dispela baset (ol ditel eksampol bilong revenu na expendisa i stap tamblo). Dispela pilai wantaim ol namba i stap klostu tru long mak bilong frod – em mas bilong halivim gavaman lo sait bilong politiks o long hamamasim ol investa.
Wanpela bikpela wina long dispela baset em ol ovasis petrolum seholdas husait i bai kisim kat long kampani teks ret long mak bilong 45% (long niupla fil) or mak bilong 50% (long lapun fil) i go daun long 30%. Dispela bai i hamamasim Oil Search na ol narapela husait bai i benifit long niupla posibol Papua LNG Projek – but ating ol i kisim lowa ret long kondenset pinis i stap. Teks rate blo petrolum sekta long PNG istap bilo weld stended pinis – dispe…

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…