PNG Government should not depend too much on loans

 The Papua New Guinea Government should not depend too much on borrowings to fund its expenditure because Papua New Guinea is already in high debts, Central Bank acting Governor Benny Popoitai says.

“The Government’s fiscal operations over the six months from June 2021 showed a deficit of K2,690.5 million, compared to a deficit of K2,085.8 million in the corresponding period of 2020,” he said.

“The higher deficit reflected increased expenditure. Although fiscal support was invaluable during times of crisis, the Government should realign and regain prudent control and discipline in its expenditure, while putting more emphasis on growing and improving its revenue sources.

“Total revenue and grants over the six months to June was K5,506.4 million, 14.4 per cent higher than in the corresponding period of 2020 and represents 42.4 per cent of the 2021 budgeted amount.

“The outcome was due to large inflows from bilateral partners.

“Total expenditure for the six months to June 2021 was K8,196.9 million, 18.8 per cent higher than in the corresponding period of 2020 and represents 41.8 per cent of the budget appropriation.

“This was due to higher capital expenditure.

“The developments in revenue and expenditure resulted in the Government recording a deficit of K2,690.5 million in the first half of the year. The deficit was financed from domestic and external sources of K1,937.1 million and K753.4 respectively.

“External borrowing comprised of K219.8 million and K949.5 million from concessional and extraordinary sources respectively, which more than offset external loan repayments of K415.9 million to commercial sources.

“Total public (Government) debt outstanding as at end of June 2021 was K43,238 million or 47.7 per cent of the Gross Domestic Product. This comprised of K24,531.7 million in domestic debt and K18,706.3 million in external debt.

“This is an increase of K2,812.9mil from the previous quarter, reflecting net borrowing during the quarter.”

Popoitai said total Government deposits at depository corporations fell by K789.9 million to K4,096.6 million in the June quarter of 2021 and reflected a drawdown of Government deposits to meet expenditures given the low revenue.

Source: The National/One PNG News

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