HOW TO RESCUE THE PNG BLEEDING ECONOMY IN THE ICU

“My philosophy as a businessperson is first establish the correct figures to inform decisions. This is a fundamental first step. Only with the correct budget figures can one make the right decisions to get the economy going again and know the best actions to ‘take back PNG’.

2019 BUDGET UPDATE

By Hon. Ian Ling-Stuckey | 10 Sept 2019.

Message from the Minister himself as to how to rescue the bleeding economy in the ICU.

“In my new role as Minister for Treasury, my immediate focus has been on rescuing the budget. Over coming weeks, and following consultation with colleagues, I will be announcing changes to get PNG’s budget back on track again.

This will include releasing updated medium-term fiscal plans as part of the 2020 Budget Strategy, as well as a Supplementary Budget, by 8 October” stated the Minister for Treasury, Ian Ling-Stuckey.

“My philosophy as a businessperson is first establish the correct figures to inform decisions. This is a fundamental first step. Only with the correct figures can one make the right decisions to get the economy going again and know the best actions to ‘take back PNG’.

“For some years, there have been concerns about PNG’s budget, debt levels and national account figures.

In this context, I have been a strong advocate of actions to address PNG’s rapid blow-out in public debt, actions to fix our foreign exchange crisis which is seriously damaging businesses, actions to stop the decline in PNG’s economic governance position, and actions to stop the deterioration in living standards for most people in PNG.

“Following a gracious handover with my colleague the Hon Sam Basil, I immediately organised a rapid ‘due diligence’ check of the Government’s fiscal position.

A due diligence team, including officers from Treasury, other economic Ministries, and my economic team, worked tirelessly for seven days to provide a new view of our economic situation. This was tough work and ruffled a few feathers, but it was important work for the country.

The due diligence view included modernising to international standards the way we measure public debt and GDP. The due diligence review also put the priority on taking a realistic rather than an optimistic view of likely revenue and expenditures in 2019.

“Unfortunately, but not unexpectedly, the due diligence work identified that PNG’s budget position was in an increasingly fragile fiscal position compared to July’s 2019 mid-year economic and fiscal outlook (MYEFO). When informing my colleagues, they appropriately wanted another perspective to confirm the due diligence outcomes.

With the IMF already undertaking a review of PNG’s budget, the IMF were given access to the due diligence findings. Within a few days, the IMF has already been able to indicate that it is broadly comfortable with the due diligence figures and that the new figures are within the ballpark.

The estimates will continue to be refined over the rest of the week. Unfortunately, these new figures confirm that as our Prime Minister has accurately stated, the PNG economy has been “struggling and bleeding”.

“Based on these findings, I must let the people know that the budget prospects for 2019 are extremely difficult. As already foreshadowed by the Prime Minister, there is bad news coming.

There will be cuts to programs such as DSIP and PSIP. With these new numbers, the depth of the O’Neill regime’s economic mismanagement will finally be revealed. We will finally know how deep a hole has been dug for this country by the former Prime Minister.

This is not a blame game. Accepting bad news is the start to fixing the problems.
And I am not focused on a backwards looking blame game. I and the Prime Minister’s team of economic Ministers are focused on looking forwards and finding solutions. We must start taking steps to climb out of the economic hole.

“Initially I had considered the option of an immediate Supplementary Budget, but this was possibly going to rush things ahead of a broader understanding of how best to start climbing out of O’Neill’s economic hole.

Over the coming weeks, I will be consulting widely with other colleagues, the business community, community groups and churches on their views for moving forwards. I am exploring urgent options to bring relief to cash flows and foreign exchange shortages.

I have taken action to mobilise international finance to support the Marape-Steven Government’s New Agenda, including innovative budget support options from Australia initiated by the Prime Minister, and actions to build confidence in our budget figures by working with the IMF.

Through warrants and other budget management tools, I will commence necessary actions to start fixing the cash flow issues underlying the 2019 Budget. I will commence the total revision of our medium-term fiscal strategy, our medium-term revenue strategy, and our medium-term debt strategy.

These updated strategies will be included as part of the 2020 Budget Strategy. The final step in this first part of the budget repair process will be a Supplementary Budget presented to Parliament on 8 October.

“My first 2 weeks as Treasurer have been extremely busy but also a delight. I have met with the Prime Minister nearly daily. I admire his vision.

So while there have been no grand announcements on the Treasury side, let me assure everyone that I have commenced the hard but detailed and necessary work to start getting out of the O’Neill economic hole.

For we must work together to find the wisdom and strength to bear the pain of a rescuing our budget so that no child will be left behind.

Hon. Ian Ling-Stuckey, CMG, MP.
Minister for Treasury

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