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Pacific Islands Development Program, East-West Center

With Support From Center for Pacific Islands Studies, University of Hawai‘i

PNG Parliament Passes $6.2 Billion Budget For 2013
2013 budget allocates more support for rural empowerment

By Isaac Nicholas

PORT MORESBY, Papua New Guinea (PNG Post-Courier, Nov. 28, 2012) – Parliament yesterday unanimously passed the K13 billion [US$6.2 billion] budget for 2013 with the full support of Opposition Leader Belden Namah.

Mr. Namah did not respond to the budget as is the tradition, opting to have the reply delivered by the Shadow Treasury spokesman Joe Lelang.

The Opposition Leader said he supported the 2013 budget as it moved resources away from Waigani to empower the rural people.

Mr. Lelang in his budget reply said the 2013 Budget was not solid, it was unsustainable and contained a lot of wastages and unproductive expenditure that ran into millions of kina and would not stimulate the economy in 2012.

He said PNG’s real growth had been revised downwards from 9.2 percent in 2012 to 4 percent in 2013.

"We see that the 2013 budget deficit of -7.2 percent or K2.538 billion [US$1.2 billion] will only have a destabilizing impact on the country. Rise in inflation is guaranteed with the excessive borrowing and with too much money chasing fewer goods," Mr. Lenag said.

He said the Opposition supported the tax review in 2013 but more needed to be done about those that continued to evade and avoid taxes.

Mr. Lelang also questioned why the Government continued funding shady and controversial projects that were under investigations like the Konebada Petroleum Park and the PNG Chancery in Solomon Islands despite the fact that funding of K9 million [US$4.3 million] was unaccounted for.

"While we make some constructive input we feel that more needs to be done to get the Government public finances to improve fiscal predictability, improve domestic resource mobilization and to avoid potentially a debt crisis through an effective restructuring and rescheduling of domestic debt repayments over the medium term," he said

"We say that much of the medium term fiscal outlook is unrealistic due to large hidden state liabilities and costs not reflected.

"It is out view that the large 2013 budget cannot be sustained and therefore a commitment to reform and restructuring of the expenditure side of the budget, domestic debt and broadening of the tax base becomes paramount."

Mr. Lelang said the estimated 2012 budget deficit figures must be revised and the accurate expenditure of K10.681 billion [US$5.1 billion] is inserted and appropriate financing numbers are updated to allow for correct records to be reflected before the budget is implemented.

"Nevertheless, we support the general thrust of the budget to support our rural population but we also request that more efforts is done to improve the capacity in the

districts as well otherwise such rural initiatives will be slow to take effect or not turn out the way we desire." Mr. Lelang said.

National Planning Minister Charles Abel described the Oppositions reply as shallow and does not offer alternatives.

"We are trying to bring longer term outlook into this financing process and it is unfair to be critical at 2013 budget but look at the longer term budget framework and context," the Alotau MP said.

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