06-06-2012, 08:41 PM
Budget black hole confirmed
Wednesday, 6 June 2012
TREASURER Don Polye has revealed a 500 million kina ($A239.5 million) deficit in the 2012 national budget, with political rival Arthur Somare convinced vast sums are unaccounted for while Prime Minister Peter O’Neill is placing blame on world market forces.
In what was interesting timing given the looming election, Polye said the next government would have to deal with the deficit.
The K10.5 billion budget he handed down in December was the biggest ever for PNG, which was unsurprising with a new government at the wheel and 2012 being an election year.
Somare, former public enterprises minister and son of founding father Sir Michael, was on the money back in April when he called on the O’Neill government to come clean on a budget black hole of at least K500 million.
If his latest statement is also spot-on, it seems there has been a large raid on the public purse.
“A budget deficit that is spiralling out of control is only one of the problems an incoming government will inherit,” Somare said.
“As I warned in a media statement on April 23, the next government will also have to cope with the ‘creative accounting’ adopted by the O’Neill-Namah government to hide vast amounts of overspending.
“Most people are already aware that O’Neill and Namah last year spent K500 million, for which there was no budget appropriation, as a payback to supporters of the August 2 political coup and their cronies.
“Other vast sums that have been dished out have also not been accounted for.”
In a report in The National today, O’Neill played down the budget concerns.
“The indicators show that the economy is doing very well but the slowdown in Europe and the Chinese economy is causing stress around the world,” he reportedly said.
“We will take appropriate actions including cutting down on government expenditure and reviewing the government estimates.”
He reportedly said the free education and health policies would not face any budget cuts as long as he was PM.
“It is premature at this stage because we have yet to get data on the performance of the economy over the past five months,” O’Neill reportedly said.
Some of the factors hurting revenue projections include the rising kina and falling commodity prices, especially for gold and copper.
But the prices for those two commodities still remain quite robust over a long-term picture, meaning they can fall quite a bit more if there is a genuine correction on the cards due to slower Chinese growth along with the ongoing economic weakness in Europe and the US.
Somare said Polye had not been candid about the likelihood the economic crisis in Europe and the slowdown in the western world and elsewhere could further depress commodity prices.
“This would cause PNG’s deficit to soar towards the billion kina level if no corrective action is taken,” he said.
Wednesday, 6 June 2012
TREASURER Don Polye has revealed a 500 million kina ($A239.5 million) deficit in the 2012 national budget, with political rival Arthur Somare convinced vast sums are unaccounted for while Prime Minister Peter O’Neill is placing blame on world market forces.
In what was interesting timing given the looming election, Polye said the next government would have to deal with the deficit.
The K10.5 billion budget he handed down in December was the biggest ever for PNG, which was unsurprising with a new government at the wheel and 2012 being an election year.
Somare, former public enterprises minister and son of founding father Sir Michael, was on the money back in April when he called on the O’Neill government to come clean on a budget black hole of at least K500 million.
If his latest statement is also spot-on, it seems there has been a large raid on the public purse.
“A budget deficit that is spiralling out of control is only one of the problems an incoming government will inherit,” Somare said.
“As I warned in a media statement on April 23, the next government will also have to cope with the ‘creative accounting’ adopted by the O’Neill-Namah government to hide vast amounts of overspending.
“Most people are already aware that O’Neill and Namah last year spent K500 million, for which there was no budget appropriation, as a payback to supporters of the August 2 political coup and their cronies.
“Other vast sums that have been dished out have also not been accounted for.”
In a report in The National today, O’Neill played down the budget concerns.
“The indicators show that the economy is doing very well but the slowdown in Europe and the Chinese economy is causing stress around the world,” he reportedly said.
“We will take appropriate actions including cutting down on government expenditure and reviewing the government estimates.”
He reportedly said the free education and health policies would not face any budget cuts as long as he was PM.
“It is premature at this stage because we have yet to get data on the performance of the economy over the past five months,” O’Neill reportedly said.
Some of the factors hurting revenue projections include the rising kina and falling commodity prices, especially for gold and copper.
But the prices for those two commodities still remain quite robust over a long-term picture, meaning they can fall quite a bit more if there is a genuine correction on the cards due to slower Chinese growth along with the ongoing economic weakness in Europe and the US.
Somare said Polye had not been candid about the likelihood the economic crisis in Europe and the slowdown in the western world and elsewhere could further depress commodity prices.
“This would cause PNG’s deficit to soar towards the billion kina level if no corrective action is taken,” he said.
