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The 2020 Budget Strategy Report

Presented by Hon. Ian Ling-Stuckey, CMG, MP. Treasurer | 27th November, 2019 The publication of the Budget Strategy Paper (BSP) is in compliance with the Papua New Guinea Fiscal Responsibility Act (FRA) 2006. It is a key

Presented by Hon. Ian Ling-Stuckey, CMG, MP.
Treasurer | 27th November, 2019


The publication of the Budget Strategy Paper (BSP) is in compliance with the Papua New Guinea Fiscal Responsibility Act (FRA) 2006. It is a key component of the Government of PNG’s (GoPNG) budget reform agenda which aims to improve the preparation of budgets, provide for efficient management of public finances and further promote transparency and accountability.


The 2020 BSP provides the public with the fiscal framework context in which the 2020 Budget will be designed. The 2020 BSP is the first being produced under the newly formed Government led by Prime Minister, Hon. James Marape and the Deputy Prime Minister and Minister for Justice and Attorney General, Hon. Davis Steven. This BSP is drawn from the high-level policy direction of the Treasurer, Hon. Ian Ling Stuckey, CMG.MP, after completing his Due Diligence exercise on taking stock of Government finances as well as introducing the 2019 Supplementary Budget on the 11th October, 2019. The finalisation of this Budget Strategy Paper has been delayed as there was a requirement for an extensive due diligence exercise to correct earlier estimates.


This 2020 Budget Strategy is not just about forming the framework for the 2020 Budget. As the planning horizon is over five years, it becomes the government’s new Medium Term Fiscal Strategy (MTFS) 2020-2024. Key targets are provided for total revenues, total expenditures including targets for both the operational and capital budgets, the program for reducing deficits from 2020 onwards, and the financing of debt levels. Major adjustments have been required as the starting point was found to be so different than at the time of the 2019 budget.


At the time of the 2019 Budget, the deficit was estimated to be K1,866 million and the debt to Gross Domestic Product (GDP) ratio at 32 per cent. After the completion of the due diligence work, and after further work on clarifying known arrears, the revised starting point in September was a deficit of K4,936 million and a debt to GDP ratio of 42 per cent. These are extraordinary revisions. They reveal there has been a need for more honest budgeting. The true economic situation must be known to plan for economic repair and reconstruction.


The framework for the 2020 Budget is to begin this process of repair. It will capture key reforms or measures contained in the Marape-Steven’s overarching development strategy underpinned in the Loloata Commitments.


The 2020 BSP has been based on a GDP series that has been revised since the 2019 Mid-Year Economic and Fiscal Outlook (MYEFO), after extensive consultations with the National Statistical Office (NSO), the Bank of PNG (BPNG) and the International Monetary Fund (IMF). All agencies have now agreed on a common methodology and accepted the PNG NSO GDP figures up to 2017, and the Treasury’s forward estimates of growth.


Marape-Steven Governments Overarching Development Strategy

The Prime Minister’s Manifesto has the theme of taking back Papua New Guinea. This vision is a call to rally the citizenry and development partners to a development path leading to a robust, inclusive and sustainable economy in which PNG citizenry have an increased stake. It rallies the country to build a stable social and political environment underpinned by a changed culture of contribution, service and civility.


The guiding doctrines of development espoused by the Five National Goals and Directive Principles, the National Strategy of Responsible Sustainable Development (StaRS), and Papua New Guineas commitment to the 17 United Nations Sustainable Development Goals, have been captured in the development principles defined by Vision 2050, and Development Strategic Plan 2030, and woven into the prescriptions of MTDPs II and III.


The central message in these plans is for Papua New Guinean citizens to take responsibility of the socio-economic destiny of the country, and reposition and develop it to be a fair and happy society, where no child is left behind. This can be achieved through smartly designed and wisely executed Government intervention programmes.


The Marape-Steven government is cognizant of the intergenerational relevance and value of these development goals. Accordingly, it advanced the ‘LOLOATA COMMITMENT’ as its rescue and reconstruction strategy going forward. It is a two phase strategy that began with a reality check of the fiscal situation of the country. A Due Diligence exercise was undertaken and based on the findings, painful but necessary corrective measures were put in place through the 2019 Supplementary Budget. These corrective measures set the basic building blocks for the 2020 and subsequent Budget Strategies.


There are many important components of the rebuilding programme, under the Loloata Commitment. Key ones will be discussed further in the 2020 Budget, including actions to reform State Owned Enterprises. The Marape-Steven Government considers the SOEs reform programme not only as a key vehicle for delivering improved and cost-effective public services, but a strategy for improving the cost structure of domestic value adding production for improved international trade competitiveness.


The broad objectives of the reconstruction and reform programme under the 2020 Budget Strategy is to provide the platform for fiscal consolidation whilst at the same time continuing with strategic capital formation necessary to continue to enable the private sector and community to grow the economy, in particular the non-resource sector, expand the tax base and strengthen the efficient and cost effective of delivery of essential services.





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