PORT MORESBY, PAPUA NEW GUINEA (2 December, 2013) –Improving the implementation capacity of public agencies to deliver the government's investment plans will be a core challenge for improving service delivery in 2014,according to anew issue of the Asian Development Bank's (ADB) Pacific Economic Monitor (PEM), released today.
Thereport, a tri-annual economic review of ADB's Pacific developing member countries, says government funding for health, education, law and order, and infrastructure in Papua New Guinea (PNG) is expected to continue its rapid growth in 2014, increasing by almost 30% over 2013 levels.
Underpinning this expenditure growth is an expected 21% increase in domestic revenue collection,stemming partly from planned improvements in tax compliance and enforcement which are expected to bring in an additional K750 million in 2014.
The reportsays the 2014 budget projects a fiscal deficit equivalent to 5.9% of GDP in line with the government's Medium Term Fiscal Strategy 2012–2017 and keeping public debt at broadly sustainable levels.
"Infrastructure is the biggest winner in the 2014 Budget, with its K2.7billion in funding constituting a 46% increase from 2013. While the government's increasing prioritization of expenditure towards key development enablers of infrastructure, education, health, and law and order is welcome news, the real challenge for 2014 will be one of implementation," said Aaron Batten, ADB's Country Economist in PNG.
For example, although the Department of Works and Implementationreceived a 60% funding increase in 2014, more than 97% of the increase in funding is for additional capital works, meaning there is limited new funding for the maintenance and operational activities related to these new projects.
To maximize the development impact of its budget allocations, a larger focus will need to be placed on recruiting and training a much larger pool of skilled Papua New Guineans to be able prepare, deliver, and ultimately maintain these new assets.
Papua New Guinea joined ADB in 1971. It is ADB's largest partner in the Pacific in terms of loans for public and private sector development.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2012, ADB assistance totaled $21.6 billion, including cofinancing of $8.3 billion.