PNG spending cutback

PNG spending cutback

STRUGGLING with cash flow problems and high debt burden, the Papua New Guinea government through its 2018 budget has announced new fiscal strategy to stabilise debts and recover from revenue collapse. The government wants to shift its debt from commercial to concessional loans to reduce its high interest costs and hopes the shift will help solve PNG’s longstanding problems with foreign exchange. It has again promised to pursue a US dollar sovereign bond issue, after difficulty finding any market appetite over the previous two years.

It has slashed spending over the previous two years, but is now introducing a 1 billion kina (US$311m) “stimulus package” with a US$31 million State Equity Fund to partner with private investors on agriculture projects. These measures it announced in the budget which it hopes to achieve under three pillars.

As highlighted in a budget analysis by Deloitte, the 2018 Budget is ambitious and looks to implement a medium term fiscal strategy, centred on the following pillars:…

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