The O’Neill regime’s eight years of PNG economic mismanagement have dug and left a very deep economic hole. Getting out of this huge and irresponsible budget hole requires much more than a fake 100 day plan.
MINISTER FOR TREASURY
PO Parliament House
m: +675 71111777
Dilu Dee Okuk (PNGACM Admin)
The True State of PNG’s Budget – K4,636 million deficit left by O’Neill
“Yesterday was one month since I humbly accepted Prime Minister Marape’s commissioning as Minister for Treasury. It has been an exhausting month of working through weekends and late nights to establish the true state of the nation’s books.
My first task, as stated from day one, was to establish the facts, and once we had the facts, then we can plan the way forward to implement the Marape-Steven government’s vision.
“The facts are now established. The facts are not good news for PNG. The O’Neill regime’s eight years of economic mismanagement have dug and dug and dug a very, very deep economic hole. Getting out of this huge and irresponsible budget hole requires much more than a fake 100 day plan.
There is no quick solution to the depth of problems created by eight year’s of O’Neill irresponsibility. But I know the people of PNG are strong and resilient. We are a tough people who can deal with bad times, who can pick ourselves up after being knocked down and show the world we can do even better.
Dealing with tough times because of previous mistakes, even if we did not directly make those mistakes, is an act of love for our children. We want to take back PNG and build a country where no child is left behind.
PNG is a great country. This means taking responsibility for our budget, admitting the true state of our nation’s finances, and then setting out solutions.
“Today, in preparation for next week’s Supplementary Budget, I start exposing the challenging facts facing our country.
First, I will reveal the true size of the 2019 budget deficit, the gap between how much we get in income and how much we spend. Just like a family, if we are spending more than we are earning, then we need to borrow and this adds to the level of our family debt.
So in my second release, I will also talk about our true debt levels. Third, I will start outlining the Marape-Steven government’s solutions to the problems being faced.
This will include the need for very major expenditure cuts in the 2019 Supplementary Budget next week. These cuts will be painful. They will be widely shared. However, there is simply too much pain to make all of the required adjustment in just the 3 months remaining in 2019.
So fourth, I will then discuss the additional financing challenge created by the huge gap between our budget income and our spending inherited from the O’Niell regime.
“The updated estimate for revenues in 2019 is K13,022 million. This is K1,244 million less than set out in the original 2019 Budget. There are major falls in both tax revenue and non-tax revenue.
The updated estimate for expenditures in 2019, before expenditure cuts, is K17,658 million. This is K1,525 million more than set out in the original 2019 Budget.
More than half of this expenditure over-run is because the O’Niell government’s wages bill is still out of control.
“The actual budget deficit left by the O’Neill regime is K4,636 million in 2019. This is by far the largest deficit in PNG’s history. It represents 5.8% of our entire economy.
The next largest deficit was also by the O’Neill regime of K3,579 million in 2014. O’Neill’s gift to the nation is a budget deficit K1,059 million more irresponsible than even his previous greatest deficit in our government’s history. This is a shameful legacy.
“The original 2019 Budget deficit estimate was K1,867 million. I said this was a fake budget estimate in my 2019 Budget response.
After the Due Diligence process, and double-checked by the independent International Monetary Fund (IMF), the updated estimate reveals K2,769 million of fake revenue and under-estimated expenditure.
If we compare the original 2019 Budget deficit of K1,867 million with the updated estimate of K4,636 million, the honest deficit is 248% greater than the fake 2019 Budget.
“The national budget deficit of K4,636 million is a very, very big number. What does it mean in practical terms? If we divide the national deficit by PNG’s population of around 9 million, we get a per person estimate.
For every single person in PNG, in 2019 alone, the O’Neill regime spent K515 more than its income. So if there are six people in your household, this means that the O’Neill government went and spent K3,090 more than it earnt on behalf of your household (six times K515 per person). This is not living within our means.
“This massive budget deficit, over K1 billion more irresponsible than the previous worst in our nation’s history, is the huge economic hole left by the O’Neill regime.
Whenever the former Prime Minister tries to justify his self-delusional claims of how well he managed the economy, let us all remember the shame of his true legacy of fiscal irresponsibility.
A budget deficit of K4,636 million. A budget deficit which would add K4,636 million to our public debt levels in 2019. My next statement will cover our true public debt levels.
With the deficit and debt fact established, I will then start setting out the government’s solutions” stated the Treasurer, Ian Ling-Stuckey.
Minister for Treasury
28 September 2019
Image credited to Dilu D Okuk