20 Nov 2013

PNG national budget focuses most on infrastructure

6:18 pm on 20 November 2013

The infrastructure, health, education as well as law and order sectors are the areas of major spending in Papua New Guinea's just-announced 2014 national budget.

Treasurer Don Polye has delivered a national budget of 15 billion kina, or US$5.6 billion for 2014. That's up two billion kina from the 2013 budget.

Johnny Blades spoke to correspondent Todagia Kelola.

TODAGIA KELOLA: The 2014 budget will comprise a deficit of 2.3 billion kina, or 5.9 percent of GDP. The budget also contained an increase in development and capital high priority programmes funding. Basically that is to address the country's capacity constraints. It has also increased service delivery funding to support medium term development pointers or enablers and meet government obligations. It's also made in a way to continue support to provinces and districts and local-level governments. Also it will perform structural reforms.

JOHNNY BLADES: Overall in the budget, what areas are getting more?

TK: The areas it has been given to are infrastructure - infrastructure has been given a total of 2.4 billion kina. The education sector will receive 1.5 billion kina - an increase of 160 million kina from the 2013 budget. In 2014, the total funding for all agencies in the health sector will be 1.4 billion kina. Law and order, this sector will receive funding of 1.3 billion kina in 2014, which will basically be for the police modernisation programme and the construction of police backroad stations along the PNG LNG corridor.

JB: Is there a feeling that this budget will address the declining kina? And of course there's this huge deficit that must be a concern to some.

TK: Yes, according to the treasurer a depreciation in the exchange rate has been managed and there is no need to panic. They assured all stakeholders that the government with the Bank of PNG, in consultation with the banks, have coping measures in place which have seen the kina's value stabilised. And they stated that the Central Bank has intervened through currency transactions that have resulted in a decrease of 2.2 billion kina in foreign reserves. Therefore he stated that there should not be any cause for concern as the chief fundamentals, such as underlying economic growth, continue to be strong and are supported by buoyant private sector business activities.

Meanwhile, Don Polye has forecast growth of 6.2 percent for PNG in 2014.