K6bn revenue shortfall due to world oil prices

The constant decline in world crude oil prices has left a US$2 billion (K6 billion) hole in Papua New Guinea’s 2016 National Budget.

Prime Minister Peter O’Neill made this statement in Parliament on Thursday after the 2016 Supplementary Budget was tabled by Treasury Minister Patrick Pruaitch.

O’Neill said cuts in government expenditures to meet the shortfall in projected revenues, to implement the 2016 National Budget, will not affect its key policy areas of free education, free health care, support to churches and partners, infrastructure development and DSIP and PSIP funding.   

He added that mining and petroleum tax, which the government depends on as a major source of revenue over the years, is declining also.

“We used to get from mining and petroleum taxes almost K2 billion per year. This year will be lucky if we get K200 million, which is a huge drop,” O’Neill said.

He added that the supplementary budget follows the assessment of the 2016 Mid-Year Economic and Fiscal Outlook (MYEFO) Report.

The supplementary budget comprises adjustments that include both expenditure saving measures of K928 million and additional revenue raising measures of K958 million. This will see cuts across all sectors to raise much-needed revenue to fill the drop in forecasted 2016 budgeted revenues.      

Author: 
Charles Yapumi