THE 2023 Budget has done little to insulate the PNG economy against the adverse global developments, Opposition Leader Joseph Lelang says.
“And it is difficult to see how the 2023 Budget will address many of the problems in Papua New Guinea as there is no visibility on how jobs will be created, inflation will be reduced or shortages in foreign reserves will be reversed,” Lelang said.
Opposition Leader Joseph Lelang said this and added there were a lot of uncertainties, either short-lived or simply a band-aid solutions from the way the government is going.
Mr Lelang said the Opposition recognizes that much of the adverse external developments since 2019 has contributed to shortages in foreign exchange, forced businesses to fold or streamline their operations, pushed a lot of our people out of jobs and prices to rise. He said real wages has declined and many families have suffered.
He said the Government’s subsidy scheme on food and fuel was only temporary and did not impact families across the country.
“The increase in tax free income threshold up to K20,000 would assist many families on low income, however, he said the impact of this was narrow and affected only those on regular income,” he said.
“The Budget was an important instrument that can be used to protect our economy, create opportunities and protect our people’s welfare. However, there is no visibility of that in the 2023 Budget.
“Inflation had risen from a low 2.9 per cent in 2019 to 6.7 per cent in 2022, while according to the Bank of PNG’s Employment Index by Industries, employment continues to remain below pre-covid 2019 levels.”
Mr Lelang said there was need to ensure the Kina remains convertible but this meant we need to generate foreign exchange.
He said according to an ADB report, the backlog of unmet orders for foreign exchange runs into billions of Kina and it takes 3-12 weeks to process demand for foreign exchange which is taking too long.
Mr Lelang said that in September this year, the Treasurer told Parliament PNG had K14 billion (US$3.9 billion) in foreign reserves but a month later in November, while handling down the 2023 Budget, the Treasurer said the country’s total reserves was K13 billion (US$3.7 billion), a shortfall of K1.0 billion.
He said the Opposition is concerned that the problem of currency shortages was taking too long to reverse and the external borrowing of K3.5 billion to fund the 2023 Budget deficit will only provide temporary relief.
“More effort was needed to focus on export- oriented industries, not kill them like the 70 per cent taxing on the forestry sector and we need to focus more on investing in long term domestic factors to drive GDP growth in this country, not become overly dependent on volatile high commodity prices to drive growth.
Mr Lelang singled out the Pacific Marine Industrial Zone (PMIZ) Project saying this would impact positively on job creation and reverse the foreign exchange shortages experienced in the country.
He said investing in the PMIZ infrastructure has to be completed immediately so the country can start moving into production and exporting.
“Only K50 million was allocated in 2023 Budget for PM1Z spread over next five years totaling K200 million,” he said.
Mr Lelang said funding must be frontloaded because PMIZ had the potential to generate more than K8 billion annually, create more than 15,000 jobs and contribute to the long-term sustainability of the PNG economy.
