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Showing posts with the label revenue

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…

FRIGHTENING GOVERNMENT PERFORMANCE IN 8 KEY AREAS OF THE ECONOMY

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NATIONAL BUDGET SPOOKS PRIVATE BUSINESS AND INVESTMENT IN PNG

byWILSON TALAG Economist Paul Flanagan's recent remarks that appeared in PNG Blogs and elsewhere highlight 8 key areas of what looks to be looming financial disaster.  Mr Flanagan's enlightening report is the basis for this discussion and why the performance of each one of the key areas has started to  spook business and investors.  The seriousness of PNG’s current financial situation is becoming very clear.   A little over a week ago the government came very close to failing to come up with the year end public servant pay.  This near disaster occurred despite supplementary budgets designed to avoid such unexpected money shortages.   Another red flag flying high and warning that behind the scenes, PNG's finances are rapidly deteriorating under the O'Neill government.

The 8 key areas of concern are (1) Government lies over the actual size and growth of the PNG economy, (2) Discrepancies  over GDP economic gro…

MORAUTA RESPONDS TO PRIME MINISTER O'NIELL

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STATEMENT by Rt Hon Mekere Morauta, KCMG November 4 2015
The Prime Minister of Papua New Guinea has once again singled me out for attack for expressing a view on current national issues. My assessment and analysis of the severe economic and financial difficulties facing the nation and the adjustments that need to be taken are entirely my own. My statements were made to promote public discussion and were published at my personal expense. Every citizen has a right to speak about national issues and challenges, and those rights should be respected by the Government. 

The Prime Minister’s extraordinary attacks on me as an individual should be seen as part of a broader campaign of intimidation and attempts to shut down dissent, by force if necessary. Dissent is a sign of a healthy society. It is a sign of a robust democracy. The right to freedom of speech and the freedom to gather together publicly to express our views are precious public commodities. The Prime Minister claims that I am mot…

PNG – Pathways from Potential Crisis

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by PAUL FLANAGAN

Potential crisis – what does this mean?

• 3 types of crisis observed in countries through time (talk will focus on first, and some comments on second)
• Fiscal crisis (PNG – first and second 1990s crises)
•Government runs out of money to pay its bills.
•Potentially manifested by shortage of government cash, ‘out of the ordinary’ borrowings,
printing money, much higher government security interest rates.
• External crisis (PNG – first and second 1990s crises)
•Running out of foreign currency to pay bills (either private or more particularly government)
•Potentially manifested by various forms of exchange rate controls, tariffs and quotas, foreign currency borrowings.
• Muddling down crisis (more African and South American examples)
•Pattern of continuing poor decision making undermining sustainable growth.
•Medium to long-term timeframe – a slow bubbling crisis that may extend over a decade.

•Potentially manifested by pattern of poor economic policy decisions, increasin…