PORT MORESBY, 01 FEBRUARY 2023
President of the Papua New Guinea Business Council
Ministers of btate and Members of Parliament
Chief Executives of Business Entities
Ladies and Gentlemen
It is indeed a pleasure to speak to all of you again at this annual Back to
Business Breakfast meeting.
It is indeed a pleasure to speak to all of you again at this annual Back to Business Breakfast meeting. This as an important feature of my calendar early in any New Year, to help businesses understand how our government would like to do its job of supporting the growth of the private sector and businesses as we work for our country.
Government recognises the importance of the private sector in our economy and from upfront, let me say thank you to all of you for your support to Papua New Guinea.
Ladies and Gentlemen, the job of government is to create a conducive socio-economic environment for businesses to grow, that I must admit.
Government must build and maintain the infrastructure and the security environment that provides the comfort for people to live and do business;
Government must build and suppoft a conducive regulatory environment;
Government must build trade and investment relationships including linking produces to markets both domestically and internationally;
Government must ensure that our Papua New Guinean labour supply is educated and healthy and available;
Government must stimulate and encourage small businesses to link up with large businesses and provide new business opportunities;
Government must ensure fair and equitable free market environment to ensure business thrive and grow with returns of profits to shareholders and tax and employment to PNG.
Ladies and Gentlemen, all these and much more to help businesses we recognise, thus I want to assure you all in the business community that you are in the heart and soul of my Government.
My government has been given a very big mandated to continue led our country following the 2022 National General Elections.
We are not a new government, we went to the elections with distinct messages and an anchor message was that of economic independence.
That was the rational of the change of government in 2019, that was the reason why my people voted my Pangu government back into office.
Our people heard us, the call of this generation of leaders to match political independence with economic strength and self sufficiency, what we label as economic independence as the country travels past 50 years on nationhood.
This 11th parliament is a significant one as it straddles the year 2025 whence our people will celebrate 50 years of independence.
The last 47 years Were no easy years but our democracy and our economy has survived the test of time.
From an economy billion when I took K110 billion under K5 billion in 1975 to an economy of around K80 over Government in 2019, today we have surpassed k110 billion.
This statistic shows that amidst the many problems that is amplified real time rn contemporary PNG, we have grown the last 47 years from a very low place in as far as the size of our Gross Domestic Product.
Ladies and Gentlemen, you will ask me why am I mentioning this upfront and my answer is simple.
Be optimistic, you in a growth country, our eoonomy will continue to grow into the future and as we stick to the path we placed PNG on after we took it back from the ugly hands of corruption and personal interests.
I promised PNG in my maiden ‘ richest black Christian nation’ speech on 30th of May 2019 that by 2029 we will be a K200 billion economy. And with budget and economic repair and reconstruction as key part of my Government’s priorities led by Treasurer Hon lan Ling Stucky and my economic ministers team, we are on our way there.
My records speaks for itself. Last three years have been amongst the toughest of our young nation’s history yet we protected and grew our economy with responsible fiscal policies.
Least we forget that our economy in 2018 was on Intensive Care Unit with high unsustainable expensive government debt, rampant corruption and a government that was not paying its creditors.
From that place we sailed straight into the Covid 19 and Ukraine Russian conflict induced economic turbulences but we preserved the functionality of our economy and grew it with responsible use of deficit budgets the last 4 years.
The sum of Government spending in our economy the last 4 fiscal years surpassed K70 billion in all of government expenditures. That played a major role in keeping our economy afloat and growing.
Let me at this juncture, step back to give some context to the fiscal path we took since taking office in 2019, as we embarked on the task of repair and reconstruction.
ln 2019, we quickly secured cheap concessional financing to cover the K2.3 billion budget deficit blowout, that was exposed through the IMF led Due Diligence process, and at the same time, delivered a decisive but responsible expenditure cut of nearly a billion Kina to the budget, while allowing the concessional loan projects to proceed.
ln 2020, after Covid-19 reduced government revenue by K2.5 billion, the governments expenditure was held to the initial budget forecast – meant no severe expenditure cuts. This was despite absorbing K508 million in COVID-19 direct expense – possibly the only country in the world to exercise such fiscal discipline.
ln 2021, the fiscal deficit of K6.27 billion was considerably below the K6.613 billion forecast at budget time, further demonstrating a record fiscal repair.
For 2022, the budget was delivered within the budget deficit forecast of K5,984.7 million. Additional windfall revenue from high commodity prices, due to Ukraine-Russian war were directed at protecting household Iike the uplift of income tax free threshold to K20,000.00 andpaying of student project fees to name a few.
The Government in 2022, introduced its 13-year Fiscal Plan, as paft of its longterm strategy for budget repair and reconstruction, against the backdrop of economic shocks, caused by the Covid-19 and Russian-Ukraine war.
This is crucial to maintain fiscal support for economic recovery efforts. It is a path towards fiscal consolidation, that is consistent with the principles of increasing revenue, reducing deficits, bringing interest costs under control and working towards a budget surplus by 2027, and in doing so, lift economic growth and employment opportunities-and ultimately, the option of a debt free sovereign State by 2034.
The plan provides a disciplined framework for bringing development aspirations within the reality of limited revenues – unlike those in the past, which have been more aspirational in nature, promising much, but without the budget to support implementation.
Within this fiscal consolidation, the Government also continues with its major structural reforms. The most prominent of these, is the shift in the share of budget resources going to capital expenditure, especially towards the GoPNG Public lnvestment Program. The capital budget rises to K9,795.9 millionin2023, of which K6,6150 million is our GoPNG Public Investment Program (PlP).
PIP has grown by 224.0 percent under our government, climbing from just K2,040.7 million in 2018. We are the infrastructure government. Ask Works Secretary and all works contractors who were contracted to work during Oniel Government and they will show you records of mygovernment paying over K2billion of O’niel Government contracts including loan components of highways, airports, ports, hospitals and schools!
Our PNG economy is expected to exceed K113.0 billion in 2023. Real non-resource sector growth (which excludes extractive sectors) is forecast at 4.6 percent, continuing the recent growth record of 4.8 percent in 2021 and 4.5 percent in 2022 – the only second time PNG’s post-independence history, to record 3 years of real growth of over 4 percent. lnflation is forecast to fall from 6.6 percent in 2022 to 5.7 percent in 2023. Mind you our running average on inflation is 7 percent.
These are a small snapshot of how we have come the last 4 fiscal years completed under Marape Pangu government. We knew the road would be tough but we also knew we can overcome if we remain committed and disciplined.
Committed and disciplined we are, Ladies and Gentlemen.
We are starting the walk on the road to 50 years of lndependence and beyond.
Our government aspires to build a stable and transparent government, which is effective in implementing our programs, and that it is strong in its adherence to law and policy.
Our government wants to build a strong economy which will ensure that our families live healthy and prosperous lives.
Ladies and Gentlemen
ln response to the Governor General’s opening statement to Parliament on 30 August 2022, I committed this government to strengthening the democratic process, building a resilient economy, developing economic sustaining infrastructures, addressing fair and equitable natural resources harvest, addressing business and investment confidence, addressing law and order, deliver better education and health and strengthening the institutions of state.
All these commitments are to ensure that our country builds a strong enabling socio-economic environment that allows businesses to thrive and succeed.
It will allow systems and processes to be anchored in the rule of law, and is handled by a healthy and educated people. This is the outcome we want to see for our country.
For 2023 we are investing big in education, health, law and order and infrastructure. These are the key enablers for economic development. Because when the economy is developed then the country will develop.
And this will happen when existing businesses and new investments grow. Thus through stable government and stable policies we will work with the private sector to grow our economy. We need to have growing and stable large businesses. Large growing businesses ensure that small local businesses are incubated ang supported.
Ladies and Gentlemen,
Let me speak on other Government initiatives to improve ease of doing businesses like;
having a one stop international trade and investment ministry and department,
tidying local reserve businesses list,
amendments to our renewable-and non-renewable resources sector laws to enable fair and equitable return to all PNG parties and our investors,
have embarked on improving entry requirements for businesses and their personnel. Both the lnvestment Promotion Authority and the lmmigration and Citizenship Office have worked hard to streamline regulations and processes so as to seek alignment with the overall government intentions which is to create efficiencies and effectiveness in our processes and systems,
Put policy based funds like SME lending support, freight subsidies, price support, land acquisition and state equity fund,
Special economic zone incentives especially in key government focus areas of downstream processing, ramping up export and import replacement business,
Setting up lndependent Commission Against Corruption as an economic security measure,
Reform central bank for monetary policy to complement fiscal policy to develop the country,
Central bank will be the custodian of our Sovereign Wealth Fund to stabilise our foreign reserves, by the way we have the highest foreign reserves in our nation’s history at present over K13 billion,
Enabling infrastructures be developed to carry our economy, and
Our international relationships at both bilateral and multi laterals will be harnessed for markets of our national produces.
PNG is set to experience exciting times ahead in terms of its economic growth as we head into our 50th year of lndependence, with major economic projects coming on stream in the renewable and non- renewabie sectors. We are investing in the creation of an operattng environment that rs open, rules based, safe and stacked with healthy and educated citizens who can find their space in the business of developing our country.
‘The extractive sector is high on our agenda. Our government continues to advocate that we give more to our PNG Stakeholder but with cognition to investors making fair and equitable return on investments. ln the recently held Sydney mining and petroleum conference, I see spoke of the PPPPW projects my government will progress substantially in 2023. These projects are Papua, Pnyang and Pasca LNGs and Porgera and Wafi Golpu mines.
ln the first half of this year, we will deliver substantial progress to these projects like no other government’s done before.
Porgera is in the final stages of finalising the operator ship agreement, the mining development contract, and aligning licensing issues, so as to secure the commencement of the mine.
The State and the Joint Venture partners of Wafi Golpu are also in the process of finalising the agreed terms before the Project Agreement is signed.
Papua LNG is undergoing FEED, and P’nyang is to be constructed after Papua LNG so the country will see LNG construction sector running from 2024 to 2032.
Talks have stalled with respect to Pasca A but we are confident that it will proceed to its final conclusion.
Ladies and Gentlemen, I am more optimistic than ever for PNG and all of you business who call PNG home. Let us all work together for all our shared interest.
On a tinal note I understand this is the last breakfast that is being conducted by your president, Ms Nuni Kulu. I would like to thank her for her hard work in advocating for the private sector at each opportunity we have had in interacting in these breakfast events and other related events. I would also like to commend the team at the Business Council of PNG for a job well done in organising this important event.
I look forward to closer collaboration with Government as we go forward.
Thank you all and God bless you all.