Wednesday, August 5, 2015

State: Stay calm

Source:The National, Wednesday August 5th, 2015
By MALUM NALU
THERE is no need for a supplementary budget at this stage of the financial year because the national economy is being well managed, Finance Minister James Marape says.
“There is no need for a supplementary budget at this stage. We are controlling expenditure through warranting and cash flow management,” he said.
He told the people to stay calm when responding to a call by the Opposition for a supplementary budget to take into account unforeseen factors in the 2015 national budget such as the drop in global oil and commodity prices.
The next session of Parliament will start on October 27 which is expected to run through to the 2016 budget session in November.
Marape admitted that revenue forecast in the 2015 budget had been affected by the drop in global commodities including oil (by 50 per cent) which “is something we can’t control”.
“What is within our control is to manage our economy by sticking to core priority areas of our budget and curtailing wastages and recurrent expenditures as well as deferring some development agendas to future budgets,” he told The National.
Deputy Opposition leader Sam Basil said they were hoping that the Government would pass a supplementary budget so that they could manage the economy well.
“The economy is in a recession right now. Oil prices are going down and they are doing department cuts and calling everyone to Port Moresby to do cuts, which will affect the delivery of goods and services,” he said.
“We strongly think that a supplementary budget is the way to go but they haven’t done that.
“In the next few months, what is the Government going to do aside from asking departments to make cuts?
“If they ask departments to make cuts, and make figures, they have to print those figures in the newspapers to tell investors and the people that they are managing the economy.”
A treasury department statement this week said the fiscal outlook had deteriorated in the first half of 2015.
“With no adjustment to budgeted expenditure in 2015, the fiscal position is expected to be a deficit of K4,817.4million or minus 9.4 percent of GDP - an increase of K2,545.6million compared to the initial deficit of K2,271.8million or minus 4.4 percent of GDP at the time of the 2015 Budget.
“This mainly reflects a significant downward revision to tax and non-tax revenue receipts, particularly from mining and petroleum taxes, and low receipts of dividends from State entities.”
The Treasury says total revenue is estimated at K11,381.7 million with the short fall of K2, 545.6million. The estimate for expenditure and net lending remains at K16,199.1m.
It also expects the debt-to-GDP ratio to rise to 41.3percent, “exceeding the debt limit of less than 35 percent of GDP as set out in the amended Fiscal Responsibility Act 2014”.
The Treasury department says the immediate challenge for the Government “is to maintain fiscal discipline throughout the second half of 2015”.

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