It is important that the government manages the use of loans wisely so that the deficit and debt levels do not go out of control, and ensure government revenue is increased to address the growing debt burden.
This was highlighted in a publication released by the PNG National Research Institute (PNG NRI) today titled “COVID-19 and the PNG Economy: Potential impacts of the K5.7 Billion economic stimulus package on the 2020 National Budget”.
The author, PNG NRI Director Dr. Osborne Sanida, said this is important because given the loans involved for deficit financing, the repayment burden will be there after the COVID-19 pandemic has gone.
“Given the loans for deficit financing, the repayment burden will be here after the COVID-19 pandemic has gone, so it is important for the Government to manage the use of the loans wisely so that the deficit and debt levels do not get out of control going forward, and that government revenue is increased to address the growing debt burden.”
His research report discusses the potential impacts of the PNG Government’s K5.7 billion economic stimulus package on the 2020 National Budget. The stimulus package has six components or measures. The potential impacts of it on the budget are both direct and indirect.
Four of the measures (i.e. treasury bond issuance; international financing; proposed Supplementary Budget; and extra expenditure for health, security and the economic sectors) will have a direct impact on the budget, by affecting key budget variables. In terms of indirect impacts, all six measures will affect the Budget indirectly via increased consumer spending that could lead to increased tax revenue for the government.