2016 Budget

Treasury Minister, Patrick Pruaitch, made the statement in the publication of the 2016 Second Quarter (Fund Released Report).

Pruaitch says the funding to the Provinces, Districts, and Local Level Governments are to to implement priority projects and while maintaining transparency at all levels of Government.

Pruaitch says the Government remains committed to achieving development across the country, particularly through its continued efforts to transform the rural economy.

 The ADB economists stated that the domestic sources of finance had dried up as commercial banks had reached their limit for exposure to Treasury bills.

“PNG is exploring options to float a sovereign bond of $1.0 billion in 2016 to refinance its borrowing. PNG may face high financing costs, and exchange rate movements could raise nominal debt.”

It is also stated that the debt service costs are increasing and are now estimated at K1.5 billion, or 10% of the 2016 budget.

He says the government has done the right thing by making estimates according to the trend of oil prices on the global market.

Deloitte, the organisers of the budget breakfast session held today at the Royal Papua Yacht Club, say  the PNG LNG project has been producing consistently in excess of its original rated capacity and this has softened the revenue impact of the reduced oil prices.

Meantime the Government expects the Sovereign Wealth Fund (SWF) to start operations in 2016 and there were some projections made prior when the oil prices were good.

Health received the third largest share with a total of K1, 565.9 million or 11 per cent of the 2016 budget which is set at K14.2 billion.

The key Health expenses include: Drugs and medical supplies K151 million; church health grants K26 million, free health care K20 million, HIV/AIDS treatment drugs K14.1 million and medical equipment K5.6 million.

Malabag said in a statement that he was proud to be a member of a Government committed to long term economic stability while always keeping the health and welfare of the people in mind.

Treasurer Patrick Pruaitch in handing down the K14.2 billion 2016 Budget said the major appropriations include: DSIP K890 million, PSIP K220 million, LLGSIP K31.4 million, District Support Grants K55.5 million and Special Support Grants K13.3 million.

The administration sector receives K2,545.8 million, or 18 per cent of the total Budget, the second largest share of the Budget.

Treasurer Patrick Pruaitch when handing down the K14.2 billion 2016 budget said the total expenditure represented a K367.2 million, or 2.4 per cent reduction from the 2015  Budget of K15,129.7 million.

He said the 2016 expenditure provided a lower fiscal ceiling compared to previous years.

“Therefore, a clear prioritisation of expenditures guided the formulation of the 2016 Budget,’’ he said.

The following are the main Budget priorities:

Debate in Parliament started at about 3pm and went on for more than 5 hours.

The government used its numerical strength to defeat a motion by Opposition Leader Don Polye calling for a one week adjournment.

They voted 84 against and 12 for.

But the government’s intention was to have the budget handed down and passed the same day.

The 2016 budget is set at K14.2 billion.

That is a deficit of K2 billion.

The supplementary budget was also passed.

Finance Minister James Marape could not reveal the government projection for next year however, he says preparations are on foot.

He says the 2015 supplementary budget will also be passed along with the main budget.

Meantime the Department of Treasury says the 2016 Budget will maintain the Government’s key priority expenditures such as Tuition Fee Free Education; Free Primary Health Care and subsidized specialized Healthcare.