Monday 18 November 2024
Treasurer Ian Ling-Stuckey says the Government continues the task of budget repair, acknowledging this is hard work filled with difficult decisions.
He outlined certain aspects such as massive pressures to increase expenditures to meet pressing development needs, and pressures to cut taxes.
He however said the government will keep repairing the budget to return to a budget surplus and start paying down its debt.
“This is a delicate balancing process. But it is one that we must get right for our people, and for the next generation” stated Mr Ling-Stuckey.
In addition, Mr Ling-Stuckey said the government has had a good report card on this work of budget repair, adding, the budget deficit is expected to fall from 8.9 percent of GDP in 2020 down to 3.2 percent of GDP in 2024.
“This is a rapid rate of budget repair in comparison to other countries. Growth continues to be strong, as confirmed by strong growth in tax revenues. Inflation forecasts have been lowered, but the cost-of-living pressures remain too high.”
As outlined by Treasurer, in the first half of the year, the Government spent K10,904.1 million or 39.8 percent of the total Budget estimate.
The expenditure was financed by total revenue of K8,981.5 million or 38.4 percent of the 2024 Budget estimate, resulting in a deficit financing of K1,922.6 million, or 48.2 percent of the 2024 Budget estimate.
“Expenditures and revenues are usually down slightly in the first half of the year.”
The Mid-Year Economic and Fiscal Outlook (MYEFO) report confirms the government is keeping on the path set out in the 13 year Budget Repair Plan, which establishes a balance between meeting the development and cost of living challenges, facing Papua New Guineans, while reducing the budget deficits to lower debt pressures.
“The MYEFO tracks the strong growth in revenues, with a 15.8 percent increase relative to last year.
“This revenue growth is being achieved without new taxes. With tax cuts introduced as part of the 2024 Budget, a 15.8 per cent growth in revenues is only possible if there is also strong growth in the economy.”
In terms of non-resource tax revenues, Mr Ling-Stuckey said expected tax collections will be 9.7 per cent higher than in 2023, achieved without any tax increases.
“There are expenditure pressures of K600 million from payments to our teachers and workers which are tracking higher than at budget time.”
He added, “ This is welcome news as we should respect these vital service delivery functions through higher wages and more staffing. At the same time, we must then find cost savings elsewhere so that we can ensure we keep budget repair on track.
“These cost savings can be managed through prudent release of warrants during the remainder of the year.”
The 2025 National Budget will be tabled in Parliament later this month.