The low revenue coming from the PNG LNG Project, and the decline in internal revenue from various sources, poses a challenge for budgetary finance for 2016 to 2018.
This is one of the current challenges facing the country, according to a presentation by Bank of PNG Governor, Loi Bakani.
Presented at the National Development Forum last week, other challenges include:
- Large budget deficits and kina depreciation of around 36 percent, between 2012 and October 2016;
- Less foreign exchange due to Kina depreciation, less reliance on domestic goods increasing foreign exchange demand; and,
- Maintaining adequate levels of foreign exchange reserves for the country to sustain confidence in the economy.
The issues highlighted are considered short-term challenges and need long-term solutions.
It is suggested the Government needs budgeted external financing, which will provide relief for domestic markets as a main source of borrowing.
The presentation however, states that the PNG economy will continue to grow in real terms but at a lower pace (2 percent to 3 percent), with inflation projected to be in the range of 6 to 7 percent.
Developing rural areas, infrastructure, education, health, agriculture, tourism and SME, and providing access to innovative technology and financing and markets, is a key strategy for the Government.
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