K2 Billion Drop In Revenue Anticipated: Ling-Stuckey
National revenue is expected to drop by K2 billion according the Treasurer Ian Ling-Stuckey. This will come as a result of the drop in oil and gas prices of which are PNG’s largest export says the Treasurer.
He said a team of local and international experts has estimated that the value of PNG’s exports will fall by at least 13 percent.
The country’s exports were estimated to bring K42 billion in 2020 however with this drop the value of exports is anticipated to fall by over K5 billion.
“This means lower incomes for mineral companies, but also lower incomes for many of our rural households,” Ling-Stuckey said.
“These external impacts will also reduce our revenues, including our resource revenues. We expect to lose around K1 billion in revenues because of these external impacts. This is bad news.”
Mr Ling-Stuckey said preliminary economic modeling indicates that PNG’s economic growth rate is likely to fall to below zero this year.
“Covid-19 will push PNG into a recession, driven by the fall in world growth as well as the impacts of shut-down measures on tourism, retail trade and other parts of our economy,” he said.
“The domestic impacts are expected to reduce our budget revenues by a further K1billion on top of the external impacts of another K1billion. So overall, we estimate the total fall will be K2bn,” he added.
The Treasurer said the International Monetary Fund will work with the government to provide K1, 260 million this year, and another K1, 260 million next year.
“We have lost K2 billion in revenues, so our revenue targets for this year will not be met. The IMF is supporting our economic reform program and I am confident that they will adjust with us,” Mr Ling-Stuckey said.
He said IMF’s support is part of a much wider program of support from the international community.
The World Bank is providing K70 million ($US20 million) in medical supplies assistance, Asian Development Bank K170 million ($US50 million) in health program support.
This comes days after the World Bank’s release it latest regional economic update with PNG’s growth rated 2020 forecast to be 0.2per cent as a baseline or -0.9per cent in a lower case.
In this report, they urged governments to protect people from the economic impact of this crisis, especially the most vulnerable, those in tourism sectors and the informal workers and for a scale up of social protection mechanisms.
They called for ease as much pressure as possible from households and businesses struggling to repay their loans given the effect of the Covid-19 pandemic.