Papua New Guinea Government has handed down yet again another historic budget – a record K16.2 billion (US$6.19b) in comparison with three previous biggest budgets of US$5.7b in 2014, US$4.9b in 2013, and US$4.01b in 2012.
The 2015 Budget has been framed against a backdrop of moderate, albeit strengthening global economic growth and continued domestic growth underpinned by the commencement of LNG exports.
It will be PNG’s 14th successive year of growth.
Treasurer Patrick Pruaitch said PNG is among of a handful of nations to sustain growth through this period.
In his Budget speech, Pruaitch forecasts the economy to grow by 15.5 per cent ‘driven by a full calendar year of gas production and supported by a rebound in the non-mining sectors.’
The government is targeting a reduction in its expenditure in future years to sustainable delivery levels which combined with an increase in revenue, largely driven by the PNG LNG project, is forecast to bring the budget into balance in 2017.
KPMG noted the 2015 revenue increase of US$0.49b was largely based on mining and petroleum tax increases of US$0.344b primarily from the PNG LNG project.
Analysing the Budget, KPMG managing partner Troy Stubbings said: “The increase in revenue from the PNG LNG project will need appropriate management to ensure that the economic benefits are realised and fiscal strengthening continues.
“The development of the Sovereign Wealth Fund (SWF) framework incorporating a budget stabilisation fund into which mining and petroleum tax revenues and dividends are to flow remains a critical priority for government.
– By Sam Vulum