Prime Minister Peter O’Neill has welcomed the tabling in
Parliament of the 2015 National Budget by the Treasurer Patrick
Pruaitch.
In welcoming the document, the Prime Minister
said the gravity and importance of the annual budget was appreciated by
all members of the Government.
“The outcome of budget decisions have a direct impact on every man, woman and child in Papua New Guinea,” PM O’Neill said.
“For this reason the National Government must be careful, disciplined and forward thinking in each budget that we hand down.
“Spending
must reach the people and improve their lives, and revenue must be
raised in the modern world economy that continues to evolve and offer
both increased challenges and opportunities.
“In recent
years, the people of our country have experienced an improvement in
health, lifestyle and economic opportunity that has never before been
experienced in our country.
“Our Government will continue to
manage the economic affairs of this nation in a way that that will
continue to improve the lives of the men, women and children of Papua
New Guinea.
“The Treasurer has commended the 2015 National Budget to the Parliament and the people of the nation.”
Fact Sheet Contents
· Expenditure to be received by the people and invested in infrastructure
· Government income is higher than expected
· Managed return to budget surplus by 2018
· Economic growth very positive and well above global average
· Kina stabilising following beneficial time for exporters
· Restructuring of employment with the evolution of mining projects
· Inflation reducing and stabilising
· Current account is moving into surplus
· Ongoing funding with debt reduction
Expenditure to be received directly by the people and invested in infrastructure
·
Total estimated government expenditure for 2015 is projected at
16.1991 billion Kina. This includes 9.2135 billion Kina in operational
expenditure being spent directly on services used by the people of Papua
New Guinea in 2015, and 6.9855 billion Kina invested in building
capital infrastructure next year.
· Operational expenditure is
allocated for schools, healthcare, security, support to agriculture and
SMEs and other government services.
· Capital expenditure
builds the infrastructure that continues to advance the national economy
forward and also has the flow-on effect of stimulating business and
creating jobs.
Significant areas of expenditure:-
Education expenditure of 1.9 billion Kina, including free schooling
for our children, expanding access to universities and vocational
training for adults.
- Healthcare expenditure of 1.8 billion
Kina to facilitate healthier and happier living and longer lives for the
people of Papua New Guinea, particularly in rural areas.
- Law
and Order expenditure of 1.6 billion Kina to create safer
communities. This includes additional and better trained police,
correctional services officers and military personnel; better equipment;
and, a stronger independent judiciary.
- Direct Funding to
Provinces of 3.7 billion Kina to ensure money is spent on services and
infrastructure for people at local level in a planned and transparent
manner.
- Infrastructure expenditure of 2.298 billion Kina to
construct the roads, bridges, ports, buildings and other
public facilities that will drive the national economy into the
future. This includes infrastructure for the Pacific Games that will
have ongoing community usage and contribute to healthy living.
Government income is higher than expected
·
Total revenue and grants will rise to 13.9 billion Kina in 2015,
which is 1.3 billion Kina higher than earlier estimates of 12.7
billion Kina.
· This includes tax revenue estimated at 11.2
billion Kina in 2015, an increase of 1.5 billion Kina from the earlier
revised estimate of 9.7 billion Kina.
· The increased tax
recipes include an additional 380 million Kina raised through improved
and more transparent tax compliance measures.
· Project grants
are anticipated to reduce by 200 million Kina from 1.5 billion Kina to
1.3 billion Kina due to factors that include international partner
decisions and currency fluctuations. It is anticipated
development support will continue to wind down alongside Papua New
Guinea’s continued long-term economic growth.
Managed return to budget surplus in 2018
·
The budget will see a deficit of around 2.3 billion Kina in 2015
driven largely by the Government’s investment in
national infrastructure. This is planned investment in infrastructure
that includes roads, airports, ports, schools, teachers and
nurses colleges, and utilities that will be used by our people and
businesses for decades to come.
· Budget deficits are planned
for 2016, with a balanced budget in 2017, which is one year earlier
than anticipated, and aim for surplus in 2018.
· Careful
management of deficits and surpluses is sound economic planning
particularly as this relates to infrastructure. If the government
did not build the infrastructure now, the economy of the future would
not be likely to reach its full growth potential.
Economic growth very positive and well above global average
·
The national economy is expected to make significant growth in 2015
of 15.5 per cent. Earlier projected 2015 growth occurred ahead of
expectations in 2014, so reduced the projected 2015 estimate.
· National economic growth is favorable compared to the global average as noted in the following table.
Economic GrowthPapua New Guinea
2014 - 8.4
2015 - 15.5
World (WB/IMF)
2014 - 3.3
2015 - 3.8
· 2015 will be the fourteenth year of uninterrupted economic growth for the nation.
Kina stabilizing following beneficial time for exporters·
The Kina depreciated by 8.3 per cent in 2014 compared to 2013,
mainly due to higher foreign exchange outflows and a strengthening US
Dollar. The Government, in consultation with the Bank of Papua New
Guinea and commercial banks, established measures to stabilize the Kina.
·
The positive news for the change in exchange rates is that this has
benefited Papua New Guinea’s exporters enabling more competitive
pricing in international markets.
Restructuring of employment with the evolution of mining projects·
Non-mining employment grew by 3 per cent to the end of the June
quarter in 2014, though mainly due to the conclusion of the construction
phase of projects, mining sector employment declined by 22.7 per
cent. This was anticipated and with the greater experience and improved
skill sets held by many of these workers, they will be absorbed through
growth in other government and private sector construction projects
coming online in 2015.
Inflation reducing and stabilising ·
Inflation will be better than originally projected in 2014 and
2015. The anticipated 6.5 per cent for 2014 has been revised down to
5.9 per cent. Inflation in 2015 is anticipated to ease to 5.5 per cent
and further reduce to average around 5 per cent for 2016 to 2019.
Current account is moving into surplus·
Papua New Guinea’s trade with the rest of the world continues to
improve from a 3.9 billion Kina deficit in 2013, to 1.4 billion Kina
deficit for the first half of 2014, to a projected surplus of 7.1
Billion Kina in 2015.
· Improvement is being driven by the
awaited full year of LNG and Ramu Nickle mine production, as well as a
rebound in agricultural and other mining production. This has been
accompanied by a fall in foreign reserves from 6.8 billion Kina at
the end of 2013, to 6.1 billion Kina in September 2014, and is
expected to recover to 6.4 billion Kina by the end of 2014.
Ongoing funding with debt reduction· Government debt is expected to fall by 228 million Kina to 14.26 billion Kina by the end of 2015.
·
The Government has a preference to raise funds from the domestic
market and this will continue as a priority where this is possible,
while also exploring options to expand the national investor base
through a range of cost-effective financing options.
· Managed
debt is essential for the economic governance of any enterprise, but
more important for government where the delivery of government services
and infrastructure investment has direct impact on the livelihoods of
families and viability of business around the nation.