11 June 2020
Minister for Treasury, Ian Ling-Stuckey, has reflected on the country’s economic impact amidst the Coronavirus Disease (COVID-19) pandemic.
In his COVID-19 update to Parliament, Mr Ling-Stuckey said the economic impacts around the world had been devastating and PNG is not immune from this downturn.
He forecast on how the economic ‘shock’ is expected to reduce the value of Papua New Guinea’s exports from US$11.3 billion in 2019, down to 15 percent to US$ 9.6 billion in 2020.
“These international developments, combined with the impacts of our actions to stop the spread of COVID-19 is estimated to reduce PNG’s gross domestic product growth this year by 3.7 percent, dropping our growth forecast from positive 2 per cent to a negative 1.7 per cent.”
Mr Ling-Stuckey however said the impact of COVID-19 in Papua New Guinea is far less than in other countries in the region.
As per IMF’s April World Economic Outlook report, the Solomon Islands is facing a 5 per cent drop in economic growth, Fiji with an 8.8 percent drop in growth, Samoa, an 8.1 per cent drop and countries such as Palau with a 13.7 per cent drop.
Mr Ling-Stuckey further said the fall in growth is expected to reduce resource revenues by an estimated K1,073 million, with domestic tax revenues to drop by K1,149 million.
The total tax revenues are now expected to be reduced by K2,222 million, which is slightly more than the earlier estimate of K2 billion.
“Unfortunately, this is another K222 million in budget cuts or additional financing that we face,” Mr Ling-Stuckey said.
Meanwhile, the Treasurer revealed more bad news in Parliament, that financing from the Asian Development Bank (ADB) Partial Credit Guarantee Bond, has been reduced from US$ 300 million to US$190 million, with a shortfall of US$110 million or K380 million, due to economic circumstances surrounding COVID-19.
“This adds to our financing challenge. Combined with the extra forecast K222 million loss in revenues, we are now looking for K502 million more than back in April,” he said.
Mr Ling-Stuckey will be exploring options for deeper budget cuts, among other options to ease these financing challenges.
In the meantime, Mr Ling-Stuckey paid tribute to all citizens, individuals, organisations and business houses, who have contributed to the successful outcome of Papua New Guinea’s war on the Coronavirus.
He believed national unity has been the key factor in the country’s victory to date.