The theme of the 2017 National Budget is 'Responsible fiscal consolidation for future growth and development' and is set at K13,349.5 million against projected revenue of K11,473.1 million.
The 2017 Budget is expected to result in a net borrowing position of 2.5% of GDP and a debt-to-GDP ratio of around 28.8 per cent in 2017 and 2018, declining thereafter to 27.0 per cent in 2021.
The Budget is set within the Government’s overarching development frameworks, including the Vision 2050, the Development Strategic Plan (2010 – 2030), the Medium Term Development Plan 2 (MTDP2) (2016-2017), the Strategy for Responsible Sustainable Development (StaRS2017), and the Fiscal Responsibility Act 2006 (FRA). It has been framed amidst a relatively weak global economy still recovering from low commodity prices and lower than anticipated growth of the domestic economy.
Key components of the 2017 Budget include:
- The PNG economy is projected to grow at 2.8 per cent in 2017.
- Inflation is expected to increase to around 7 per cent due to the continued depreciation of the Kina exchange rate and volatile movements in the prices of seasonal items.
- PNG’s current account balance is expected to maintain a surplus position of K11,449.8 million in 2016 due to the recovery of the agriculture sector from El Nino, the resumption of production from Ok Tedi mine and the continuing production from the PNG LNG project.
- In 2017, Total Revenue is projected at K11,473.1 million, K248.4 million below the 2016 Supplementary Budget estimate.
- Total expenditure in 2017 is estimated to be K13,349.5 million, a reduction of K485 million from the 2016 Supplementary Budget of K13,834 million.
- The 2017 Budget includes potentially significant amendments from a taxation viewpoint including, resourcing the IRC to improve compliance, changes to corporate income tax, foreign contractor withholding tax and dividend withholding tax rates, imposing APT across all mining and petroleum projects and adjusting the taxable value of employer provided housing.