The Treasury Department’s 20-16 Mid-Year Economic and Fiscal Outlook, provided early warning signals on the need for an urgent Government action on a sustainable budget.
In a statement this afternoon, Treasurer Pruaitch said an urgent early Supplementary Budget will demonstrate the Government’s commitment to prudent and disciplined fiscal policy, and maintenance of macro-economic stability.
Treasury Secretary Dairi Vele has recommended that the 2016 Budget spending be reduced by 1.9 billion kina to bring it in line with revenue shortfalls.
Pruaitch today says economic growth expectations for this year have been reduced from 4.3% to 2.2% and government revenue is down by an estimated 15 percent, and the treasurer is concerned that without corrective action, the budget deficit would blow out.
Government revenue has deteriorated since the passing of the 20-16 budget, with the Treasurer attributing it to many factors, among them projected shortfalls in both mineral and non-mineral revenues, natural phenomena such as drought, low commodity prices and foreign exchange issues in the domestic market.
Pruaitch says he has already alerted the Prime Minister for the need of an urgent supplementary budget and will now bring to O’Neil’s attention the concerns raised in the 2016 Mid Year Economic and Fiscal Outlook.