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Subject: 2009 Budget: Snapshot


Author:
larsen
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Date Posted: Thu, Nov 27 2008, 03:42:38am

“Sadly the Opposition does not either have a better budget for 2009”

Solemnly, may I express that the 2009 Budget is economically unproductive as is the Government and the Opposition, which sadly does not seemingly has a better alternative.

In the foreword of the Economic and Development Policies Budget Book, volume 1, the Treasurer dimly navigates the US financial crisis and thus, has little visibility for the country while the Opposition chats of it over a glass of beer in the Lamana Gold Club.

The budget does not provide economic policies to combat expected inflationary growth but is optimistic that over-stressed monetary instruments be employed which evidently have little or no potent on imported inflation. As was demonstrated by the students of University of Technology (UoT) of the adverse impacts of any marginal increase in inflation on the wellbeing of the people, the government still underplays it.

Government preaches after the procreation of the Medium Term Fiscal Strategy 2008-12 without wisdom from the past however, it is just a dawn drop in the desert. The MTFS 2008-12 does not even reflect benefits of doubtful ‘claimed’ economic reforms to the private and public sectors though still awaiting fruition of Public Sector Reform Management Unit (PSRMU).

Furthermore, it is pleasing to have a similar pessimistic view of the country’s future but the Treasurer does not offer economic policies to safe-guide the economy. Sadly, the Government is failing to effectively and efficiently channel the budget with reforms to promote principles of supply-side economics. Minister John Hickey is not supported well to deliver the National Agriculture Development Plan (NADP) because Minister Don Polye is much engaged in his unfinished Kandep Open Election issues.

These issues necessitate the essentiality for re-prioritisation and re-organization of the public service mechanism to evidently support the economic policies stipulated in the Budget to ‘promote sustainable economic growth through empowering and transforming the rural economy’. However, the Budget does not exemplify such structural change to its framework.

Mathematically, the 2009 Budget is estimated to be K393.2 million lower and artificially anchored by K600.0 million, which is about 2.8 per cent of estimated nominal Gross Domestic Product (GDP). After these adjustments, the 2009 Budget would be much lower than the 2008 Budget with larger negative growth in GDP.

In the 2009 revenue budget, the revenue performance is sound though some of the revenue estimates are systematically underestimated to create politicized budget surplus through such poor analysis.

The revenue also includes a K600.0 million to be injected from trust accounts which is systematically termed as ‘bad expenditure’ and is improper fiscally in itself as well as its treatment. That is, the K600.0 million is expenditure of previous budgets and hence be classified as refinancing item which still is fiscally improper.

In the 2009 expenditure budget, the national departments, provincial governments and the statutory agencies are not provide adequate budget resources to support the implementation of the development funds in the trust accounts as well as the huge increased funding in the Development Budget, which is K859.2 million or 4.0 per cent of GDP higher than the 2008 Budget.

Such distortionary structure of the Budget implies that the 2009 Budget would not be implemented as per its theme and hence is still economically unproductive and spells ‘a year of missed opportunities’.

The government should address some of the following programmes:

• re-prioritization of the statutory functions and re-organization of the public service mechanism for the coordination, implementation and evaluation of the Budget. Departments of Transport and Work, Agriculture and Livestock, National Planning and Central Supplies and Tenders Board (CSTB) be provided adequate budgetary resources to implement the budget appropriately. This systematic change calls on building adequate capacities in relevant departments and agencies for this purpose;

• the government, through the budget, should aggressively undertake the essential structural policy reforms undertaken by the Independent Consumer and Competition Commission (ICCC) other agencies to lubricate the structural fibres to enable the private sector as being the economic engine in growing the economy;

• the financial sector performance is very low. Though monetary survey of the Central Bank indicate that credit facility has increased, it is still somewhat not sufficient. The government should ensure that financial credits are made available to the economy relatively quicker. The microfinance programmes and the National Development Bank (NDB), as well as all financial institutions, provide such financial credits readily and abundantly to private and household sectors;

• the government should adopt economic policies promoting physical capital deepening and acquisition of modern technological changes. The government can ensure this process through expenditure or taxation programmes; and

• the government’s focus on the education system be more targeted in producing more technical and highly qualified human resources. There is biased emphasis in education system whereby primary education is be allocated more budget resources thus, creating saturated effects and bottlenecks for producing university graduates.

The prime emphasis of 2007-9 Budgets is to increase the quality and quantity of rural services which is overwhelmingly admitted. The District Service Improvement Programme (DSIP) is the pivotal pillar but the budget resources allocation has been more politicized. The government needs to consistently control, implement and evaluate the various programmes rigorously to attain the desired objectives prior to any further budgetary allocations.

Above all, the emphasis is that the Government be more practical to providing disintegrated and productive budgets than merely engaging in foreplay with its teasing Opposition.

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[> Subject: Re: 2009 Budget: Snapshot


Author:
larsen
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Date Posted: Sat, Nov 29 2008, 10:41:46am

For those interested readers, please find enclosed the website address for 2009 Budget for the country.

......................
http://www.treasury.gov.pg/html/national_budget/national_budget_2009.htm

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[> Subject: Re: 2009 Budget: Snapshot


Author:
.
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Date Posted: Wed, Dec 03 2008, 06:00:28pm

Larsen,

Thank you for the website address and a good note on the 2009 Budget. However, please can I ask the following for some advice from you:

2009 National Budget: Allocations to Enga Province

Recurrent Budget = K48.2579 million
Development Budget = K38.0000 million

Total Allocation = K86.2579 million


Given this:

(i) is there a breakdown of the development budget allocation?;

(ii) where would the district development fund and the district improvement programmes funds be placed in the budget?; and

(iii) where would the previous district development fund and the previous dsip funds located?

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[> [> Subject: Re: 2009 Budget: Snapshot


Author:
larsen
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Date Posted: Wed, Dec 03 2008, 10:25:16pm


I will try my best to explain somethings which, I believe, will form the answers to your questions:

Firstly, the 2009 budget allocation to the Enga Province is K86.3 million but it is underestimated because, as you have pointed out, some of the essential development funds for the province, not for the politicians, are allocated in other Departments which are termed as 'executing/implementaing departments/agencies.

Secondly:

(i) I cannot be able, in this situation at this point in time, provide a breakdowm of the K38.0 million allocation for the province, not the politicians, under the Development Budget. The materials are not posted in the website but I note that most of these funds would be for ongoing development projects such as the Kandep Wheat Project. I wish I could provide all the detailed information.

(ii)Yes, some of these development funds are project-specific such as the discretionary support grants for the members and the district service improvement programmes allocated to the Department of National Planning and Evaluation as an executing/implementing department or agency.
In the Budget documents, it shows that the Department of National Planning and Evaluation is allocated K551.99 million under the development budget. The second is Department of Works with K469.0 million and the third is Department of Education with K160.3 million.

The huge development budget allocation evidently depicts that all the funds mentioned above, belonging to the provinces, are parked under this Department. During the financial year, the funds would be drawdown as projects are implemented.

(iii) I note that most of the previous allocations must have been drawndown by the provinces/members and if there are some previous funds oustanding then, these funds would be placed in various trust accounts or would be allocated through the budget.

I assume that Enga Province must have drawndown most of its funds but these could be in various back accounts and the prime signatory is the political member. I understand that the political members are still planning and it is quite suprising that the funds would have vanished by the time a half-baked, disintergrated, unstrategic and unproductive development plan is tabled and presented to the members or the province.

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