THE economy continues to be a worry for Papua New Guinea. Despite reassurances from the government and positive projections by the International Monetary Fund (IMF), severe revenue shortfalls and expending budget deficits are expected in 2016. The Bank of PNG has in Januar weighed in on the issue, warning the government of further potential revenue shortfalls as the oil price continues to fall.
The Bank has urged the National Government to reconsider its revenue estimates in the 2016 National Budget. Central Bank Governor Loi Bakani in the light of the continued depreciation in global commodity prices in the Quarterly Economic Bulletin for the September Quarter of 2015. With the 2016 budget already cut from the 2015 budget estimate by 2.4 % – the bank has raised concerns for the K14.8 billion money plan for the year, which is K12.7 billion in revenue and a deficit of K2.1 billion or 3.3 percent of GDP.
Concerns about the 2016 Budget, including the K12.7 billion revenue expected to be largely driven by the mineral and petroleum tax. Since the release of the 2016 Budget, international prices for mineral and petroleum has dropped further and are forecast to be even lower. The IMF forecast for the two commodities are $US42 per barrel and $US 9.5 per million metric British terminal units (mmbtu) in 2016.