Govt optimistic of 2017 economic climate

Treasury Secretary Dairi Vele

By MATTHEW VARI

Sunday, November 6, 2016 (Sunday Chronicle, PNG)

DESPITE its downfalls in its predictions for the 2016 financial year, the National Government is cautiously optimistic of the 2017 financial year as it handed down its budget for next year.

With cuts being the order of the day, the global economy is projected to recover growing by 3.5% compare to 3.1% in 2016, according to Treasury Secretary Dairy Vele.

“Our own economy is projected to grow at 2.8% in real terms given by a rebound in mining and quarrying and the non-mining sector while the petroleum sector will revert to trend after we’ve absorbed the full effect of the first LNG production in 2014 and 2015,” Vele said.

“Inflation is projected to be at 7% and this reflects the exchange rate depreciation, volatile movements in seasonal items such as betelnut which weigh the basket and the expenditure associated with holding an election in 2017 and of course showcasing our country as we host the APEC summit in 2018.”

“Foreign exchange balance continues to improve as the OkTedi Mine ramps up to full production; we should realize additional Forex (Foreign Exchange) reserves when we access the second transfer of the credit freeze facility later on this year.”

“The government’s fiscal strategy for 2017 is themed Responsible Fiscal Consolidation for Future Growth and Development”.”

He said the 2017 the budget has a revenue or cash in envelope of K11.089 billion, comprising of tax revenue projections of K8.687 billion, nontax revenue projections at K1.433 billion and donor grant projection K987 million, against a cash out expenditure envelope of 12.965.4 billion.

“2017 budget deficit is a K1.876 billion or 2.5% of GDP- total government debt stands at K21.623 billion, 28.8% of GDP.”

“This budget meets its deficit target of 2.5%, this budget is well within the Fiscal Responsibility Act Debt to GDP ratio limit of 30%.”

“In relation to our commodity price assumptions we are a bit more optimistic about these assumptions, in particularly as the pickup rebound has already commenced, but the reality for us is that we will feel these effects next year.”