Supplementary budget aims to maintain budget deficit

Treasury Minister Patrick Pruaitch says the supplementary budget aims to make adjustments to ensure that planned deficit remains at a budgeted level.

The budget passed yesterday in Parliament will see cuts across all sectors of the government expenditures to raise much needed revenue to fill the budget vacuum because of drop in forecasted 2016 revenues. 

The 2016 supplementary budget comprises adjustments that include both expenditure saving measures of K928 million and additional revenue raising measures of K958 million.         

“As a responsible government, we have decided to make the required adjustments to ensure that our planned deficit remains at the budgeted level pf K2.1 billion or 3.8 percent of GDP. And the supplementary budgets seek to implement these adjustments,” Pruaitch said.

He also told Parliament that 2016 Mid- Year Economic and Fiscal Outlook (MYEFO) Report released by his department states that;

  • Whilst the medium term outlook for PNG economy is positive our GDP growth in 2016 has been revised down to 2.2 per cent from the 2016 budget projection of 4.3 percent;
  • Non- mining GDP growth is expected to remain positive but moderate slightly to 2.6 percent;
  • The Exchange rate is projected to weaken against US Dollar by 9.1 percent and Australian Dollar by 12.6 percent; and
  • Inflation is projected to increase from 5.7 percent to 6.6 percent.  

“The revised growth projection of 2.2 percent for 2016 is largely due to impact on our economy of external factors such as the El- Nino weather phenomena which brought drought and frost to our large agriculture base as well as continued low commodity prices and foreign exchange shortage,” Pruaitch said.   

Author: 
Charles Yapumi