Bakani, in his Quarterly Economic Bulletin also reiterated his call for Government departments and agencies to live within their means while maintaining critical services for the public.
He said the level of foreign exchange reserves as of Dec 30, 2016, was K5,266.9 (US$1,685.4) million, compared to K5,467.5 (US$1,725.1) million at the end of September, 2016.
Bakani explained that the Government’s decline in revenue in 2016 is due to low commodity prices and low tax collections.
He said both revenue and expenditure have been lower than budgeted for in 2016.
However, Bakani said the Government is commended for its timely action in introducing a Supplementary Budget in August 2016 to address the budgetary situation and tighten up on expenditure.
He said the planned external financing through a debut sovereign bond of US$500 million (K1.5b) did not eventuate while only the first tranche (US$200 million (K600m)) of the Credit Suisse loan was obtained, with the balance of $US300 million (K900m) expected this month (January) 2017.
“Because of the limited external financing of the budget deficit, most of the financing was through the issuance of Government securities.
“The market appetite for these securities was limited, especially in the second half of the year.
“Therefore, the Central Bank had to assist the Government by picking up some of the under-subscriptions at the auctions.”
Bakani added that for monetary policy purpose and to promote the development of the secondary market for Government securities, the Bank of PNG plans to on-sell these securities through the TAP facility, starting in January/February 2017.
According to Investopedia, a TAP issue is a procedure that allows borrowers to sell bonds or other short-term debt instruments from past issues.