From aid donors and other sources Hou announces
CARETAKER minister of finance has announced additional financial support that has become available to support the 2014 budget.
This follows budget pressures due to the April floods and the suspension of production at the Gold Ridge Mine.
Rick Hou last week said that the Government has received some additional budget support from a number of sources this year.
This was both in response to the floods and also from funds that were received in prior years for projects not yet completed, a government statement said yesterday.
The minister said that a major proportion of increased donor grant support has been in direct response to the call for support from the Government in relation to the floods.
“This includes $48.8 million from Papua New Guinea, of which $18 million will be directed to the Rural Transport Initiative, to assist with flood repairs.
“The Australian Government has also provided an additional $26.1 million for the National Transport Fund.”
Minister Hou said that the Australian Government has also provided performance linked budgetary support of $10 million which is to be used to support community services obligations provided to State Owned Enterprises (SOE).
“There has also been a significant increase in donor contributions for the development budget, of around $88.2 million, which includes the re-appropriation of projects not completed in 2013 such as funding provided for the Ministries of Education and Health for infrastructure rehabilitation and repairs.” Minister Hou said.
In July 2014 the Government successfully negotiated from the Asian Development Bank (ADB) US $13.22 million (around SBD $96 million) funding for the US $15.62 million Transport Sector Flood Recovery Project.
Minister Hou said that the ADB funding comprises of US $6.61 million (SBD $48 million) in loan and US $6.61 million (SBD $48 million) in grant. Only the loan component is repayable from SIG to the ADB.
“The project will reconstruct infrastructure damaged in Guadalcanal by the April 2014 flash flood. The loan component will have an interest rate of 1% and be repaid over 40 years with a grace period (on principal only) of 10 years. SIG will contribute US$ 2.4 million to the Project financing.” Minister Hou said.
Minister Hou also revealed that discussions and negotiation are also being finalized with the World Bank for funding assistance from the Crisis Response Window for additional financing to the Rural Development Program (RDP) and the Rapid Employment Program in flood affected areas.
Minister Hou said that donor grants, the ADB and World Bank funds would greatly assist with the rehabilitation of public infrastructure damaged by the floods.
Minister Hou stated that overall the Review highlights the current budget position for 2014 is a forecast deficit of around $164 million. However, Minister Hou said that he is confident that this will be fully financed by a mixture of careful management of payments and under spends in some expenditure items, additional funding from donor partners and drawing on reserves as required to fund 2014 commitments.
On a slightly more positive note, Minister Hou indicated that indications of slightly better economic growth and revenue collections since the mid-year review was prepared, especially if this bounce back is sustained, should assist with the overall management and financing of the budgetary position over the remainder of 2014.