Category Archives: Finance

The Govt’s 100 Day Plan Expires Tomorrow

BY GORETHY KENNETH  : Post Courier

 

The Government’s 100 days 25 Point Plan expires tomorrow (Tuesday) with most of the proposed projects proactively undertaken, Treasurer and Deputy Prime Minister Charles Abel have said.

And in light of prevailing circumstances the 100 days 25 Point Plan was and is intended to demonstrate proactively and inspire confidence and kick-start the Alotau Accord II by undertaking specific activities around.

“Not so long ago I stood here and delivered the 2017 Supplementary Budget that was Point 1 in the 25 Point 100 Day Plan to kick-start the Alotau Accord ll of this coalition government.

“The 2018 Budget our first substantive annual budget, is Point 2 of the 100 Day Plan, and will be another illustration of our intention to deliver on our promise to maintain fiscal discipline, grow our revenues, strengthen our economic base, improve governance and act strategically,” Mr Abel said.

“Our Government has taken stock following the national elections through a consultative process of engagement with stakeholders from Government, the private sector, development partners and community-based organisations.

“This has been important in helping guide our interventions, and in the spirit of partnership we will continue this open engagement.”

“These activities obviously roll into Points 1 and 2 of the 25 Point Plan which are the 2017 Supplementary and 2018 Budgets.

“The intention in Points 1 and 2 was to maintain fiscal discipline in the light of the prevailing difficult circumstances in terms of our budget parameters of a 2.5% fiscal deficit and debt to GDP of 30% so as not to put more stress on government financing and the economy.

“A number of measures were undertaken to maintain this discipline but primarily as per Point 4, and thanks to the understanding of Honourable Members of this Parliament, the Service Improvement Program was reduced in 2017,” he said.

Here’s how the 25-Point Plan was carried out and is being implemented now:

Point 3 was related to payroll strengthening and the OSPEAC (Organisation Staffing and Personnel Emoluments Committee) has been reactivated and is progressing a payroll audit and cleansing exercise and the MD registration requirement as explained by the Minister for Public Service in Parliament. This is in response to the primary cost escalation factor of Government which is the unsustainable growth in personnel emoluments.

Point 5 was for:

  1. i) The drawdown of the balance of the Credit Suisse loan of which two technical requirements will have been met following this budget session enabling the final balance to be drawn.
  2. ii) To access World Bank and ADB budget support funding for the 2018 budget. This has been achieved following my trip to Washington where the World Bank provides US$100m for debt restructuring in 2018 and another $100m in both 2019 and 2020. The A08 is also providing budget support commencing in 2018 for the health sector of up to US$300m commencing in 2018. These measures provide financial resources on good terms and bring in foreign exchange.

Point 6 was for:

  1. i) Oil Search to provide a minimum of 50% of the crude oil needs to the Napanapa Refinery and in Kina terms. This has been achieved through an agreement and is happening.
  2. ii) Transition to gas-powered electricity the Pom Gas 58MW electricity project has been approved by Cabinet and has commenced construction to provide the cheapest in country power source using our own gas and all sales denominated in Kina. The new power plant will be owned by Oil Search and Kumul Petroleum with shares to be taken up by MRDC. The availability of domestic gas can catalyse other gas-powered initiatives.

iii) Rice production the rice quota scheme has been delayed and 3 large scale rice projects are being developed with 3 separate private sector partners with potential support in the 2018 budget through the Agriculture Commercialization Fund.

  1. iv) The Bank of Papua New Guinea intervention into the forex market with US$100m is done. The BPNG is also conducting a review of all foreign currency accounts and the obligations of those account holders, particularly resource companies to remit excess funds back to PNG.

Point 7 for non-tax revenue collecting agencies to remit 90% of their revenues to CRF has commenced with some immediate action with specific agencies and will be reinforced by the Public Money Management Regularization Bill 2017 approved by Cabinet and to be tabled in conjunction with this Budget.

Points 8 and 10 relate to tax regime reform and this is being managed through the new Medium Term Revenue Strategy, developed in conjunction with the IMF and a new Tax Administration Bill which I will bring shortly. Measures will commence in this budget to tidy up the tax code and the BPNG, lRC, IPA and commercial banks are cooperating to enforce compulsory Tax Identification Number requirement for opening bank accounts. The commercial banks have agreed to provide information to the lRC regarding bank accounts being operated in a business manner for further scrutiny.

Significant funding support is provided in the 2018 budget for both the IRC and Customs to boost capacity against quantified additional revenue collection.

Point 9 was the establishment of the task forces for the IRC, Lands and the Customs and Illicit Trade. Funding has been provided in the Supplementary Budget and the Attorney General, Labour and immigration Ministers are leading the Customs and illicit Trade, Lands Minister the Lands task force and Treasurer the IRC task force.

Point 11 is for the progress of some significant resource development projects and; Wapi Golpu, PNG LNG expansion, Papua LNG is all on track for early works, pre FEED or FEED in 2018. Western LNG has announced pre FEED works last month.

Point 12 is for the launch of the new Australian DFAT grant-funded projects; the PNG Australia Economic and Social infrastructure Program and ANGAU Hospital re-development design are still pending, and the TB Project co-funded with the World Bank has had the financing documents executed already.

Point 13 is the power projects;

  1. i) the 58 MW Pom Gas project construction has begun. ii) the 30MW PNG Biomass Project in Markham with Oil Search is in progress.

iii) the Ramu 2 180MW Project has had commercial close via a Cabinet decision but

is pending financial close due to certain conditions precedent. iv) Naoro Brown River Hydro Project is progressing with funding from the World Bank.

  1. v) Hela Gas power solution is being negotiated with Exxon Mobil and Oil Search.  In the meantime, funding is provided in this budget to pull the power “”9 from Mendi to Hides to provide the missing power and NBN telecommunications link to access power to the communities from the Ramu Grid and surplus from the Tari existing generator.

Point 14 is certain high impact projects:

  1. i) the international submarine cable that the Australian Government has now offered to fund from Sydney to Port Moresby and Port Moresby to Honiara. PNG will own these 100% and 50% respectively and will substantially increase reliability and lower the cost of data into PNG some 25 times.  In the Pacific Marine, Industrial Project has had a new financing agreement sign with the China EXIM Bank, the Sepik Plains agriculture project, together with Baiyer Valley and the Centre.

Plains are identified for large-scale rice production as described earlier.

Point 15 is the commencement of the US$1 billion upgrade of the Highlands Highway of which the Project Management Unit has been established at Works and contracts have been advertised for supervisory contractors. Work will commence in 2018.

Point 16 is the Gerehu 38 Affordable Housing Pilot Project where 1,762 allotments are being made available free to qualifying citizens. The earthworks have been completed and power and water services are now being constructed. Together with the concessional funding at BSP this will make housing accessible to ordinary Papua New Guineans and drive construction and employment. It can provide an example to duplicate in other centres.

Point 17 is for the commencement of the new Enga Provincial Hospital construction and Mount Hagen Hospital PPP redevelopment plan in 2018.

Point 18 is for the ceasing of closed tender financing which Cabinet has approved and the bringing forward the National Procurement Authority Bill which is ready to come back to Cabinet after changes were requested by Cabinet.

Point 19 requires audited accounts for SOEs and Statutory Authorities by mid-2018.

As Treasurer I will be tabling all the reports for the Agencies under my responsibility as soon as they are cleared by Cabinet.

Point 20 is to have all prescribed Boards appointed. This is underway particularly under the State Enterprises Minister and the Agriculture Minister.

Point 21 refers to freeing up resource landowner benefits; 1) the PNG LNG landowners vetting issues are ongoing but royalty payments to the plant site landowners have commenced and it is anticipated to shortly resolve the pipeline first payments and progress to the conclusion the clan vetting at the gas fields.

  1. ii) the OK Tedi landowner CMCA and Non-CMCA have funds held in Trust that has been cleared by the Courts and I am waiting for advice from the Justice

Department to authorise some of the pending contracted works against those funds.

Point 22 proposed to suspend proposed amendments to the Lands Act, the lPA Act, the Agriculture Investment Act, the Agriculture Administration Adjustment Act and the Mineral Resources Authority and the Mining Act to allow further consultation. This has been done.

Point 23 refers to the National Energy Authority Bill. This should refer to the Petroleum Authority Bill which is being finalised for Parliament.

Point 24 refers to progressing the Population Policy and funding has been provided in the 2018 budget under the Sustainable Development Program at Planning for this.

Point 25 refers to Medium Term Development Plan3 to be published in 2018. This is the 5-year development plan and indicator targets for the government of the day which will incorporate the United Nations Sustainable Development Goals.

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PM: Best Budget in 16yrs

By CLIFFORD FAIPARIK (The National )

 

PRIME Minister Peter O’Neill says the 2018 national budget, passed by Parliament last evening, is the best he has seen in the past 16 years, including when he served as the Treasurer.

He yesterday criticised the Opposition response to the K14.7 billion budget, calling on Shadow Treasurer Ian Ling-Stuckey to withdraw his “fake budget” remark.

“This is very disappointing as it will give a bad signal to our international investors. I’m calling on the Shadow Treasury Ian Ling- Stuckey to withdraw his statement,” he said.

“This is by far one of the best budgets that I have ever seen since I have been in this Parliament for 16 years now. That includes the budget that I have presented as well.”

O’Neill had served as a treasurer in the Sir Michael Somare-led government.

“I say this because this budget is now putting us on a course to make sure that this country’s economic base and growth will be such that it can be self-sustainable,” he said.

“So it is quite disappointing that some of the terminologies that he (Ling-Stuckey) used are unbecoming of leaders of this honourable house. We have to be careful of how we portray the image of our country, our parliament and ourselves.

“Sometimes for short political convenience and point-scoring we say things and do things that are not really in the best interest of our country. We have to be constructive.

“It’s always easy to have a blame-game going on in politics. But some of us want to move ahead and met the challenges ahead of us.”

Before it rose for the Christmas break, Parliament passed the Tax Administration Bill 2017 and the Public Money Management Bill 2017. Parliament will resume sitting on Feb 6 next year.

PNG Moving into a Cashless Society

By : Post Courier

 

Papua New Guinea’s remote areas are now moving from traditional communities to the modern economy in the space of one generation, which is an enormous challenge.

APEC Minister Justin Tkatchenko said advances in mobile phone technology were already enabling people in Papua New Guinea and around the world to manage their finances without having to carry cash.

And this will be the topic of discussion in today’s session, with the aim to address the challenges PNG faces, and to develop solutions that authorities and its government can apply in communities throughout the APEC region.

“I am particularly interested in looking at how our economies can move to a cashless society – using modern technologies,” he said.

“Advances in mobile phone technology is already enabling people in Papua New Guinea, and around the world, to manage their finances without having to carry cash.

“Our people can pay their electricity bills and make purchases simply by using their mobile phones. But for economies like Papua New Guinea, particularly in remote areas that are moving from traditional communities to the modern economy in the space of one generation – this is an enormous challenge.

“That is the whole point of this symposium today – to address the challenges we face, and to develop solutions that we can apply in communities throughout the APEC region. I am confident that this symposium, with its impressive line-up of subject matter experts, will set the foundations upon which we can advance APEC’s ongoing agenda.”

“Then for upcoming SOMs, I hope you can see other locations and people around Papua New Guinea – from the Highlands to the Islands.

“May you have fruitful discussions during the course of the following year.

“I look forward to welcoming you and your leaders in November 2018 to Port Moresby for the Leaders’ Summit.

“Our Melanesian culture dictates that we make your stay here in Papua New Guinea as comfortable, enjoyable and productive as possible.”

O’Neill Warns Contractors Over Funds

By : Post Courier

 

Prime Minister Peter O’Neill has warned contractors that they will be held accountable for every toea in public funds they are given for construction of public infrastructure.

He was referring to classrooms throughout the nation.

He said with more schools and classrooms being built, contractors will be held accountable for every toea in public funds they are given for construction.

That is the clear message delivered by Mr O’Neill when opening a new classroom building in Kimbe, West New Britain Province.

“Continuing to improve education is our government’s commitment to our future generations.

“Better education provides the greatest hope for our children, particularly in remote and rural areas.

“In 2018 we have allocated K1.29 billion for the education sector, which is nearly 9 per cent of National Budget. This is an increase of 13 per cent from the 2017 Supplementary Budget.

“We have placed more than an additional one million students in school over the past five years, and now we are applying additional focus on improving the quality of education.

“Now we are building more schools and classrooms.”

The Prime Minister issued a stern warning to all companies involved in the construction of school projects, that public money will be fully accounted for and documented.

“Many times the Government has given contracts to certain contractors who fail to complete their jobs and run off with payments.

“This must stop and we are looking back at previous contracts to identify any irregularities for further investigation.

“It is vital for our children to have proper buildings to learn, and any time there is fraud this deprives our children of their right to education.

“We also have seen a number of builders that have delivered high-quality school buildings and their commitment and accountability is helping us to advance the Nation.”

Government Clamps down on Corporate Veil – Corporate Firms pays more Taxes

A look into 2018 National Budget

1st December 2017

Currently, a “corporate veil” exists which does not allow the CG to collect the income tax from the company’s holding company or related companies even if it has been distributed as a dividend or transferred as a non-monetary asset to those group holding companies.

In this Budget, the Government will remove the “corporate veil” to make the parent (holding) company and other groups of companies liable for the tax liability incurred by the subsidiary company. This will allow the CG to collect tax distributed as dividends or transferred as a non- monetary asset to other Group companies in PNG or overseas.

This measure will be revenue positive in the medium to long term and is expected to be effective 1st January 2018.

There are cases where large corporations’ profits generated from business operations in PNG pay little or no income tax with profits paid over to its holding companies largely as dividend payments. The paying of the company’s cash as dividends in conjunction with the reduction in the company’s non-cash assets leaves the IRC unable to collect any outstanding tax liabilities from the company.

These large corporations may have a large tax liability and be stripped of all assets leaving the Commissioner General (CG) unable to collect income tax assessed to the company.

Government taken measures to manage wild spendings by SOE’s

November 30, 2017

By ISAAC NICHOLAS

The Government has taken steps to centralise the budgetary process by cracking down on some public and statutory bodies collecting public monies and spend these outside of the Budget.

Deputy Prime Minister and Minister for Treasury and Finance Charles Abel said the Government is serious about improving the fiscal health of the country and this bill is a demonstration of that serious intent.

“Public funds that are raised by public and statutory bodies as non-tax revenue rightly belong in the Consolidated Revenue Fund so that they may be appropriated for expenditure by Parliament to meet the objectives of the Government.”

Opposition Leader Patrick Pruaitch interjected claiming that the bill is part of the budget bills and in normal tradition this bill must be passed along with the budget.

“Why are we dealing with Budget Bills separately when the debate on the budget has been adjourned to next week Tuesday? Can we stop sneaking in stuff? We need to be able to understand the bills and it is part of the budget papers. It is attached to the budget bills.”

Prime Minister Peter O’Neill had to intervene to allow Mr Abel to introduce the bill, make his speech and defer the passing to Tuesday next week.

Minister Abel then proceeded saying that for too long, it has been the practice of some public and statutory bodies to retain, without authority, this non tax revenue to meet operational and other expenditures.

“These expenditures have taken place outside the budget process and this is unacceptable to government. Some, but not all, public and statutory do have legislation in place that purportedly allows them to retain this non-profit revenue, but those provisions have always offended against the best principles of public financial management and this Bill remedies those matters.

The Bill binds all public and statutory bodies. State owned Enterprises are excluded as they are not statutory bodies.

The Bill does not apply to the Bougainville or any public or statutory body created by the Bougainville Government.

The Government has decided to explicitly exempt Kumul Consolidated Holdings, Kumul Petroleum Company and the Kumul Minerals Company from this law as fiscal arrangements to them are currently being reviewed.

https://postcourier.com.pg/govt-cracks-budget-spending-soes/

K14 Billion for 2018

By : Post Courier

This Government will mobilise necessary resources within the tight fiscal envelope to provide growth conditions to set the pace for future growth and development.

The 2018 Capital investment Budget consolidate key interventions that will encourage business activities, generate employment, increase both export and tax revenues, replace import, and broaden and diversify our economic base strengthening renewable sectors and manufacturing.

A total deficit figure of K1987.2 million has also been factored in, which will be financed through external sources comprising K1613.4 million and K375.8 million from domestic sources.

The financing requirement for 2018 will result in total government debt reaching K25,807.6 million by the end of 2018, equivalent to 32.2 percent of GDP.

There are no new surprises in the 2018 Budget as the government introduces taxation measures aimed at improving revenue collection through greater compliance, broadening the tax base more equitably and efficiently and making tax administration simpler and more effective.

Mr Abel, in handing the 2018 Budget in Parliament, themed “Review our priorities, refocus our energies and reinforce our strengths”, said the government will maintain key priority expenditures in education, health, infrastructure, law and order, agriculture, tourism and small and medium enterprises.

The government has restored the DSIP, PSIP and WSIP in 2018 with K10 million to each district totalling K880 million and provinces to receive K10 million each totalling K220 million and ward SIPs get K64.4 million.

It has also allocated K300 million for administrative and logistics preparation for the APEC meeting next year.

The budget for the first time has given a big boost with the introduction of an economic stimulus package that will cost K665.9 million to grow the economy through agriculture, tourism and SMEs.

Mr Abel said the government is committed to delivering the Alotau Accord 2, as started in the 100-Day Plan, and the 2018 Budget is the second component that should spur economic growth, generate jobs, and empower people through meaningful engagement in economic activities to better themselves.

“The government will continue to invest in key national infrastructure programs in 2018, particularly the Highlands Highway, coastal jetties, the missing link road program, hydro and gas power generation stations and the international submarine cable project,” he said.

He said these are important transformational projects that will reduce costs in doing business, improve market access for rural farmers, and improve and lower cost of communications for businesses and consumers.

“The 2018 Budget will shift focus to generating jobs and business opportunities for our people in agriculture, tourism and SMEs. And it will provide the platform to showcase the best of PNG to the world at the upcoming APEC Summit,” Mr Abel said.

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