Parliament resumes with focus on 2020 recovery budget
Updated: Nov 27, 2019
Papua New Guinea’s Parliament resumed for its last sitting for 2019 this week with one major agenda for this final session, tabling of the 2020 National budget.
It is undoubtedly a ‘repair budget’ focused on recovery as continuously echoed by the Treasurer and industry commentators. As said by Prime Minister Hon. James Marape on several occasions it will be a budget focused on ‘charting the path to recovery for the economy now and into the future’.
Treasurer Ian Ling-Stuckey and National Planning Minister Sam Basil will address a Budget Lock Up expected tomorrow (Thursday Nov 28).
The Prime Minister recently announced that Australia recently approved a US$300 million (approx. K1 billion) concessional loan to PNG that will provide support to the National budget. It is understood PNG’s commitment to economic reforms to get back on track and start of Public Accounts Committee hearings may have helped to foster a positive response.
China’s growing influence in the Pacific may also be another factor forcing a relook at traditional aid support.
Treasurer Ling-Stuckey will outline how this loan will factor into PNG’s 2020 National Budget and how it is expected to help businesses – one major area would be to improve foreign exchange availability in the economy which has hindered many businesses during the course of 2019.
Following this, Parliament will adjourn till next week giving the opposition time to peruse National Budget 2020 for their traditional budget reply.
Government has a lot of unpaid bills, particularly loans and for retired public servants and unpaid service bills. It passed a Supplementary budget in October and raised the deficit ratio well above the 34% legal limit following unplanned spending and under-budgeted commitments over many years, particularly during the O’Neil government reign.
Water and power have been rationed in the capital city for the past few months. One of the largest expenditure arrears covers payments to retired public servants, estimated to be about K1.8 billion, as recently noted by the Strategic Budget Committee. This claim is amidst a downturn in the economy and claims by the business industry this figure is incorrect.
Despite the tough economic times in PNG amidst predictions of a major downturn in the global economy since the world Financial Crisis, business houses have continued to invest in PNG with Steamships multi-million kina investment in construction in downtown Port Moresby, positive response in getting the Wafi-Golpu discussion further on the path of progress and Innovative Agro Industries exporting strawberries overseas with plans to further boost agribusiness activities across a range of sub-sectors in PNG’s highlands. Or Anitua Housing Solutions celebrating a significant milestone in October as it handed the first of keys in its 158 housing project over to PNG’s latest homeowner.
A recent rejection by ExxonMobil on the terms put forward by the PNG Government on the next phase of PNG’s LNG expansion has not dampened spirits with positivity still in the air that negotiations will conclude with a win-win for everyone. Many Papua New Guinean’s have taken to social media site Facebook to air their grievance, while others more optimistic as this was only the start of negotiations. It is understood the Papua LNG is now on hold following a temporary court order taken out by Baimuru landowners through umbrella association Purari Development Association.
Since becoming the 8th Prime Minister of PNG after ousting former PM Peter O’Neil at the end of May this year, PM Marape has called for review of resource laws (starting with mining and then petroleum), particularly of benefits to resource owners and the country. This has featured in business discussions and industry concerns that proposed changes may affect investment in the extractives industries sector, which has been a major contributor to PNG’s economy over many decades – with mining and petroleum contributing about 26% to PNG’s GDP. Calls for collaboration have been central during these discussions and are expected to feature during the upcoming PNG Mining and Conference meet.
One of the biggest challenges for PNG is to ensure a quick review of resource laws and policies ensuring they do not deter investment but are a win-win for all stakeholders.
Compliance and enforcement, good governance and addressing corruption remain major challenges in Papua New Guinea.
Despite all this, there has been much positive development in terms of improved commodity prices, fostering of SME’s, innovation and entrepreneurship in PNG with hosting of its inaugural PNG Investment Week mid this year, hosting of the Innovation PNG event led by Pom Chamber of Commerce and Industry and Business Advantage International. Following this will be hosting of the PNG Mining and Petroleum Conference by the PNG Chamber of Mines and Petroleum December 3-5 at the Stanley Hotel and Suites, before the five day StartUp PNG’19 Convention hosted by Kumul Foundation Inc. at Apec Haus starting Tuesday December 10th. The car park around Apec Haus is expected to be turned into an all day all night SME market place during the event.
Going forward, addressing corruption, ensuring compliance at all levels, diversification of the economy (SME’s, agribusiness, ecotourism and fisheries, etc...) and prudent fiscal management while offering a stable legal, financial and regulatory framework will underpin socio-economic development in Papua New Guinea for many years to come.