Thursday 19 Jul 2018 | 12:35 | SYDNEY
Thursday 19 Jul 2018 | 12:35 | SYDNEY

PNG budget goes for growth despite financial crisis


Jenny Hayward-Jones


19 November 2008 15:44

The Papua New Guinea Government handed down a PGK7.6 billion (approx.US$3 billion) budget for 2009 yesterday. The Government’s revenue expectations were downgraded to reflect the effects of the global financial crisis on PNG – a decline in mineral revenues courtesy of lower global prices and the appreciation of the kina. Treasurer Patrick Pruaitch was nevertheless confident that growth prospects remained favourable for PNG and allocated a record PGK2.59 billion to the development budget.

Although the Treasury’s projections of 6.2% GDP growth may be optimistic and the Treasurer has acknowledged that continued falls in commodity prices will require spending adjustments next year, the budget is a reminder of PNG’s impressive economic performance over the last year. GDP growth of 6.6% has been forecast for 2008, driven mostly by minerals and commodities, but also construction and telecommunications. PNG’s Standard and Poor’s credit rating was upgraded in 2007 to B- for long-term foreign borrowings.

This success, however, has not yet translated into improved lives for the majority of Papua New Guineans. Basic service delivery has declined while government revenues have risen. The child mortality rate stands at 60 per 1000 births, and the maternal mortality rate at 470 per 100,000 live births. Only 41 per cent of births are attended by skilled health professionals. 

Increases in budget allocations to district administrations in last year’s budget appear to have had little impact on service delivery, with anecdotal reports suggesting many districts were unable even to obtain the promised funds from Port Moresby.

In the 2009 budget, funding to provincial governments and districts increases by 40%. The Government has also emphasised its intention to transform the rural economy and provide employment opportunities for PNG’s rural majority. New conditions have been introduced to increase the accountability of provincial governments and improve service delivery. Critical portfolios like health, hospital management services and education have all received funding increases. Expenditure on new roads and road maintenance and other vital infrastructure has also been increased.

The disappointing statistics on PNG’s social indicators recently published in this UNICEF report and this one by UNFPA should remind the Somare Government of its responsibility to ensure that budget measures reverse negative trends in human development, as well as protect the economy from the global financial crisis.

Photo by Flickr user TreMichLan, used under a Creative Commons license.