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Showing posts with the label debt

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…

Sri Lanka, the first Asian country to become the victim of China’s debt trap - Warning signs for PNG

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by MANISH SHARMA
Editor’s note: All Pacific nations need to read this story and heed the warning before it is too late. One of you could be next. SRI Lanka has been crippled under a severe debt problem.

In the last decade, it has invested billions of dollars in building huge infrastructure and most of the projects haven’t yet produced any adequate returns. Sri Lankan Government is now struggling to make payments and hence facing a severe debt crunch.

Sri Lanka’s total debt stands at $64bn. About a whopping 95 per cent of all government revenues go towards debt repayment. The debt to China is eight billion dollars. Many local citizens feel the country is being sold to the Chinese.

The problem is that money borrowed has been seemingly squandered on infrastructure that shows no sign of turning a profit, which is even more damaging for the Sri Lankan economy.
Sri Lanka availed easy loans from China in order to build infrastructure across the nation. China offers easy loans t…

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…

WHERE IS DR JACOB WEISS? O'NEILL'S SUPER ECONOMIST

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by STEVEN ROLLAND

As the country is fast sinking into debt and economic ruin, we are seeking answers. We know Prime Minister Peter O'Neill is a failed businessman, having failed in three (3) businesses he started before joining politics. His true success in business came when he put his hands into the public coffers. The rest is history. We cannot expect miracles from him. He is like an inexperienced mechanic who enjoys stripping all the parts of a vehicle in the pretext of fixing it but really does not know how to fix it. It will be moments when he will disappear without fixing the mess he created.

Behind O'Neill's shonky economic management were a number of spivvy characters. One that PM O'Neill relied most was Dr Jacob Weiss, who provided most of the advise on structuring and procuring more loans. Jacob Weiss would attend Government Caucus meetings and mislead all the clown/naïve Members of Parliament that it was okay to borrow excessive from overseas and domestic m…

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. A dr…

PNG’S 2017 BUDGET – FISCALLY FRAUDULENT

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byPAUL 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 more so. And …

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 state owned enterpr…

The King and Prince of Lies Continue to mislead Papua New Guineans on the state of Economy.

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by MICHAEL JOSEPH PASSINGAN

Peter O’Neill remains the King of Lies. The Prince of Lies is his teaboy Isaac Lupari. Data released this month by the Bank of Papua New Guinea shows their statements about the price PNG receives for its LNG are completely untrue. Compare these statements with the truth as revealed by the central bank in the accompanying graph: "The drop in the oil price will not affect LNG revenues as we have forward contracts in place that are set at fixed pricing formula" - Peter O’Neill, January, 2015.” “[Polye claims] that Papua New Guinea will receive substantially less income from LNG sales and this is simply not true. PNG LNG exports and prices are predominantly locked into long-term forward sales contracts. In simple terms this means that PNG will receive the same price for LNG.” Isaac Lupari, December 2014. O’Neill and Lupari have told so many lies they no longer know what truth is. Their constant lying brings the Office of the Prime Minister i…

SO IS PNG BROKE?

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by BRYAN KRAMER

The short answer is, Yes. This is evident following the O'Neill Government’s delayed payments of the public servant salaries last Wednesday.

I was first made aware of the issue a week earlier when an article was posted on social media explaining that public servants would not be paid on time due to cash-flow crisis and that the Government would blame it on the payroll system.

A week later its what exactly transpired.

Prime Minister Peter O'Neill, Secretary of Treasury Dairi Vele, and Secretary of Finance Dr Ken Ngangan all claimed the delay was due to the payroll system and nothing to do with being broke.
Secretary of Treasury Vele issued a public statement, "Papua New Guinea is not broke!” He added that the economy was estimated to have grown by 9.9 per cent last year, driven by the ramp up of the full year of the liquefied natural gas (LNG) production. He further explained PNG’s economic growth was among the highest in the world, “PNG’s…

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…