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PNG TOO SHY TO REVEAL REAL STATE OF ECONOMY TO IMF

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by PAUL FLANAGAN PNG’s government must be embarrassed by the International Monetary Fund’s (IMF) assessment of its economic performance. In an extraordinary step, and the first time in PNG’s 41 year history of Independence, the PNG government has refused to release the IMF’s 2016 summary of the PNG economy. 98% of countries agreed to release this information in 2015 – so the PNG government has moved to the bottom 2% of governments when it comes to economic transparency. In the IMF’s final press release (see here) before Christmas (generally seen as a good time to bury bad news), the International Monetary Fund indicated that “The [PNG] authorities need more time to consider the publication of the staff report and the related press release.” This appears to be polite IMF diplomatic speak for the PNG government not wanting to release the information. The IMF mission visited in mid-2016. An early draft asking for PNG government comments would have been provided about two months ago

SLIPPERY SLOPE, PNG EFFECTIVELY PRINTING MONEY TO FUND DEFICIT BUDGET - HYPERINFLATION ANYONE?

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by PAUL FLANAGAN In an article for the ANU’s Development Policy Centre eighteen months ago (see here) , I congratulated PNG’s central bank (BPNG) for its very constructive stance in stopping its effective printing of money to fund the government’s budget deficit. I noted how this reflected positively on the independence of BPNG, an independence built into its charter by Sir Mekere Morauta (PNG’s former Prime Minister) and Sir Wilson Kamit (PNG’s central bank governor from 1999 to 2009) in response to PNG’s last major economic crisis in the late 1990s. Unfortunately, this independent role appears to have been reversed from the start of this year. Based on the latest Quarterly Economic Bulletin released on 18 November 2016 and its accompanying tables (esp Table 2-3 for BPNG’s assets sheet see here ) PNG appears to have returned to a very slippery slope of effectively printing money by back-stopping auctions in government securities – a practice initially warned about in September 2

PNG’S 2016 BUDGET FAILURE – ANOTHER 2016 SUPPLEMENTARY BUDGET REQUIRED

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by PAUL FLANAGAN Executive Summary The 2016 Budget appears to have failed in its constitutional requirements to appropriate sufficient funding for the activities of government This includes servicing debt (amortization). The Opposition is correct to highlight the absurd differences between the 2016 and 2017 budgetary appropriations But the error appears to be in the 2016 budget One that was rushed through without the chance for adequate democratic scrutiny by the Opposition Holders of Government Bills and Bonds may now have to pay the price – as they did in the Kokopo Loans Affair And possibly the public more broadly. A Supplementary Budget should have been passed at the start of this week to correct the possible constitutional error that had already been pointed out to government by a local PNG analyst (my hat off to her – PNG needs more local analysis and women leaders such as this). In 2016, after allowing for the Supplementary Budget, only 56.7% of required expen

2017 BUDGET BLUES - K40 MILLION SLUSH FUND ALLOCATED FOR PM's PERSONAL USE

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by PNGBLOGS Prime Minister Peter O’Neill’s greed and corruption is on show again in the 2017 Budget, with K40 million allocated for his personal use. The slush fund is a new allocation, under the Treasury and Finance Miscellaneous category, entitled Prime Minister’s Commitments. Also in this category is K3 million for “PM’s Official Staff Determination Payouts”. Treasury and Finance Miscellaneous can be viewed on Page 187 of Volume 2a, 2017 Budget Estimates of Revenue and Expenditure for National Government Departments http://www.treasury.gov.pg/html/national_budget/files/2017/Vol2a-Revenue%20and%20Expenditure%20National%20Govt%20Depts.pdf No details of the new slush fund have been given. No reference was made to it in the Treasurer’s speech. No details are available of who or what the K40 million is to be spent on. There is no evidence of any acquittal requirements. This is a slush fund pure and simple and the Prime Minister and his Treasurer are trying to keep it secret

GOVERNMENT SPENT K10 BILLION ILLEGALLY THIS YEAR

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by PNGBLOGS   Prime Minister Peter O’Neill and Treasurer Patrick Pruaitch have been caught out in a massive Constitutional breach over state borrowings and repayment of the national debt in 2015 and 2016. Their failure to comply with Section 209 of the Constitution means all domestic debt – Treasury Bills and Inscribed Stock - issued in both years, and repayment of that debt, is technically illegal. The unlawful amount involved will be about K10 billion by the end of this year. The Constitutional breach and the failure to acknowledge and correct it highlights the incompetence and lack of integrity of the Prime Minister and Treasurer. It highlights the complete disregard by the Prime Minister and his Regime for the laws of Papua New Guinea, including the Mama Law. The Constitutional breach was identified by blogger Kessy Sawang, a financial analyst and former Deputy Commissioner of Papua New Guinea Customs Service, and Head of Secretariat of the Tax Review Se

2017 BUDGET CONFIRMS APEC COST IS OVER K3 BILLION - PNG PRIME MINISTER KEEPS LYING TO STAY IN POWER

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by PNGBLOGS The 2017 Budget handed down yesterday confirms fears that the cost of APEC is far more than the K3 billion estimated by a recent International Monetary Fund report on PNG. The allocation for this year is K250 million, taking the total cost to at least K3.8 billion over the four years 2015, 2016, 2017 and 2018. The current cost of K3.8 billion will rise even more when the Budget allocation for 2018 is announced at this time next year. The IMF report stated that “the government plans to spend K3 billion over 2015-18 on the preparations for APEC 2018”. Prime Minister O’Neill told Parliament last week that “the amount mention by IMF is utterly rubbish, inaccurate and not true.” But the IMF estimate is based on figures provided by Treasury officials during meetings in 2015 and earlier this year, and is likely to be very conservative. Further increases in expenditure are possible as the Prime Minister and the APEC Coordinating Auth

IMF PUTS TRUE COST OF APEC SUMMIT AT K3 BILLION KINA, TO BE FINANCED LARGELY BY DEBT

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by LOWEY INSTITUTE The 2016 Budget was  one of emergency  for Papua New Guinea. Adjusting to a 20% collapse in revenue caused by plummeting commodity prices and an economic slow-down, the government has implemented expenditure cuts  that are harsher  than those contained in Greece’s austerity package. In many ways, the 2016 Budget was the one PNG had to have. While commentators, including myself, have questioned the severity and the way in which cuts have been made, all agree the government could not keep spending at the pace it has been given the collapse in revenue and rapid increases in public debt. But will expenditure actually slow? And what is the true level of public debt in PNG? We can shed some light on these questions by focusing on a specific, big-ticket item of expenditure: PNG’s hosting of the APEC leaders’ meeting in 2018. Port Moresby is going through a massive transformation in preparation for this event, driven by a confusing mixture of public, private and

A SPECIAL REPORT ON THE 2017 BUDGET TO BE HANDED THIS WEEK - A BUDGET STRUCTURED FOR FAILURE TO KEEP PNC IN POWER

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by JASON P KANGOMA Treasurer Patrick Pruaitch is scheduled to hand down the 2017 Budget in Parliament this week. Given that 2017 is election year, the Budget is certain to be dominated by the usual O’Neill Regime spin and deceit, along with wasteful and irresponsible spending measures. But the central feature will be drastic cuts to essential social services such as health and education, and further suffering for ordinary Papua New Guineans. Every successive O’Neill Budget has been a failure, creating more problems than they solve, and driving the nation further towards total collapse. This special PNG Blogs report reveals the ongoing damage Prime Minister Peter O’Neill’s corruption, greed and mismanagement is doing to Papua New Guinea.   POVERTY INCREASING UNDER O’NEILL REGIME The new announcement by the O’Neill Regime that it has obtained a K1 billion rescue package from the Asian Development Bank proves that Prime Minister Peter O’Neill’s economic and finan