This is not only an issue for debt sustainability, but also for service delivery. As the next graph shows, expenditure now hovers above 20% of GDP, and revenue around 15% of GDP. The basic budget problem that PNG faces is a structural gap between expenditure and revenue. However, despite these promising indications, PNG is far from achieving a fiscal recovery. As a share of GDP, expenditure fell from 22.7% in 2020 to 21.6% in 2021. Expenditure grew in 2021 by slightly less than the rate of inflation. This reflects the revenue growth noted above, as well as expenditure restraint. Third, the fiscal deficit fell from 8.6% of GDP in 2020 to 6.7% in 2021. Grants (foreign aid) also increased by 47%, indicating strong support from foreign governments and multilaterals during COVID-19, including the first budget support grant after two decades from Australia. The revenue increase in 2021 was largely driven by mining and petroleum taxes, reflecting higher commodity prices. This is more than the target in the government’s ambitious plan to achieve a balanced budget in 2027, which requires 7% annual revenue growth. Second, after two years of negative growth, revenue grew strongly, by 9.7% after inflation, or from 14.2% of GDP in 2020 to 14.9% in 2021. As the graph below shows, they have both started to fall relative to GDP. But the recently released 2021 Final Budget Outcome contains some promising signs.įirst, interest payments and the salary bill, both of which have increased rapidly since the boom ended in 2013, have been brought under control, at least for now. The COVID-19 pandemic has made things worse by depressing revenue. Papua New Guinea has been facing fiscal problems since the end of its economic boom almost a decade ago, with large deficits, increasing debt, falling revenue, and a rapidly growing salary bill. What we’ve been reading this week SIGNS OF FISCAL RECOVERY IN PAPUA NEW GUINEA? In the long end, the TBill auction rates we are seeing today are a good reflection as to the poor returns from the last two GIS auctions. The finance company money is reflecting very little need for cash with Fincorp 365day rates at 2.50% In the interest rate market, we saw the 364 TBill auction remain steady at 4.40% with the market oversubscribed by 367mill (52%).
The order book has me a nett buyer of CCP, BSP and KSL WEEKLY MARKET REPORT | 01 August, 2022 – 05 August, 2022 STOCK
BSP saw 1,701,314 shares exchange hands closing lower by 0.01 toea to K12.41 while CCP traded 1,314 shares unchanged at K1.85 per share. On the equity front, we had a very quiet week which had two stocks trade on our local bourse.
8 August, 2022 Welcome to this week’s JMP Report
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