Opposition leader Jeremiah Manele says the government should use the nation’s cash reserves in potential export oriented businesses.
He was commenting on the Sogavare government’s decision to use $460 million of our cash reserves to fund the 2015 budget.
Finance minister Snyder Rini tabled the budget in parliament last week.
Manele said the government’s decision to use part of our reserves was a bold one.
“In this regard, I wish to thank previous governments including the last NCRA government for their efforts and fiscal discipline in building up our cash reserves,” Manele said.
“I also thank our development partners for their budget support of $871.3 million towards the 2015 budget.”
But Manele suggested that the decision to use our cash reserves has to be rewarded by high investment returns from the productive sector.
“It would be wise to use this $460 million in potential export oriented businesses that have the capacity to increase production outputs hence increase our foreign reserves or in areas where our development partners cannot support us on.
“This cash reserve funding must be used for quality investments, otherwise we could be throwing our hard earned money into a bottomless pit.”
He also warned the Sogavare government risks repeating a mistake that happened some years ago when the government then for the first time used cash reserves to fund the budget.
“At that time, the economy became stagnant, the financial system and securities market collapsed, and the government went beyond the legal limits on the issuance of treasury bills.
“The government then had no choice but to resort to offshore borrowing.
“I trust that this government will exercise fiscal discipline to avoid such a serious and precarious scenario.
It would be advisable to exercise fiscal prudence given the expansionary 2015 budget estimates,” Manele said.