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Showing posts with the label surplus

DEVELOPMENT AND ‘ECONOMIC HITMAN’ CAN OUR NEW NATIONAL TRADE POLICY ESCAPE THESE ‘LOOTERS’?

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by CYRIL GARE
One of the greatest challenges for our new first time politicians is to acquaint themselves with and understand the country’s foreign policy among others. It is even challenging for a first-time Minister. In many democracies in the world, a first-time politician does not become a Minister immediately. The reason is obvious. He or she must first understudy and learn the trade skills of the game before taking on a ministerial responsibility in Government.

Last week, we boasted about the launch of PNG’s first ever National Trade Policy (NTP). In time, many Papua New Guineans including myself will be able to read and understand the NTP from an available copy. For now, let’s just deduce from information provided in media reports that the NTP now “gives an upper hand to negotiate trade with its partners”.

In essence, trade involves supply and demand; i) we supply others with what they do not have, and ii) in reciprocate buy from them what we do not have such as medicine and fue…

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…

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…

PNG’s frightening fiscal figures

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by PAUL FLANAGAN

The PNG Government released its Mid-Year Economic and Fiscal Outlook (MYEFO) on Monday – the update on the 2015 budget. The estimated budget deficit for 2015 blows out from an already high budgeted 4.4% of GDP to 9.4%. This would be the highest in PNG’s history. Public debt levels are expected to skyrocket from the earlier estimate of 27.8% of GDP to 41.3%. In Australia, such a rapid change in the estimated fiscal position would go well beyond being termed “a budget crisis”. PNG’s official figures are much worse than at the time of PNG’s last economic crisis at the end of the 1990s (see graph below).

PNG expenditure and revenues as a share of GDP – with updated figures from 2015 MYEFO Note: The gap between the lines indicates the size of the government deficit or surplus. Both lines exclude grants (aid).

The drivers for the rapid deterioration in PNG’s fiscal situation are the fall in international commodity prices, a growth slow down as well as sales of publi…