‘2020 was tough, 2021 will be better’ is the New Year’s summary from the Treasurer, Ian Ling-Stuckey.
Ling-Stuckey outlined that 2020 started with a positive outlook.
“After the economic recession of 2018, growth had bounced back by 6 percent in 2019 under the Marape Government. The prospects were good as the economic reform program, supported by international partners, had begun,” he stated.
“Budget reforms were underway, PNG Connect was underway, foreign exchange reforms were underway, financing reforms were underway, tax avoidance was being targeted, and the growth focus was on supporting the agriculture, tourism, manufacturing and services sector, especially SMEs.
“Then the once in a century COVID-19 pandemic reduced global growth to the worst worldwide recession since World War II. Much worse than the Asian Financial crisis that created problems in the late 1990s, much worse than the global financial crisis of 2008. In response to a K2.7 billion drop in forecast revenues, the government cut the budget hard in the 2020 Supplementary Budget, absorbed all COVID-19 expenditure, and financed the gap on some of the best terms PNG has ever seen (loans with zero percent interest rates).
“Looking forward, the prospects are much brighter than the dark days of March, April and May when the fears were that the pandemic would kill tens of thousands of people in PNG. The emergence of a vaccine within a year is unprecedented. Global hope is lifting, and so is the hope for the PNG economy in 2021.
“Official forecasts, supported by the IMF, is that the PNG economy will grow from K81.9 billion in 2020 to K90.3 billion in 2021, a nominal growth rate of 10.6 percent. Growth of over 10 percent is also expected again in 2022. This is good news for PNG businesses and PNG families. There should be more investment and better job prospects emerging,” continued the Treasurer.
“The National Restoration and Growth Commitment (Loloata) includes many actions so as Treasurer, I will focus on some of the key budget and economic actions.
“The focus is on building a robust economy with strong jobs and incomes growth. The forward looking ideas to making a better and more attractive PNG economy include a fairer nonrenewable resource regime, Connect PNG, special economic zones while protecting the revenue-led budget strategy, a massive expansion in labour mobility programs, and improvements in foreign exchange availability and trade opportunities.
“The budget strategy is based on moving to more of a revenue-led approach to budget repair and management while protecting core services of health, education and the law and justice sectors.
“The 2021 Budget’s medium-term budget repair strategy will see the budget deficits start to fall quickly under the following principles of ‘spend the money we have more wisely’, ‘raise the revenues more fairly’, and ‘finance the debt more cheaply’.
“I am optimistic that under the Marape-Basil government, 2021 will be a year where PNG emerges from the COVID-19 pandemic crisis to a stronger and better economy and budget.
“Best wishes for 2021.”