KFM Weekly Investment Update: Friday, 15 November 2018
- Deputy Prime Minister and Treasurer Hon. Charles Abel presented in
Parliament the National Budget for 2019 with total expenditure at K16.1bn
while total revenue at K14.3bn which is a deficit of K1.9bn. - The National Budget estimates Real GDP growth for 2019 to be 4.0% and
increase over the next 5 years to 6.3% in 2023. - Total Expenditure is higher than the estimate for 2018 Budget by 9.6%. The
Government aims to focus on key expenditure including SMEs, District
Services Improvement Programs (DSIP), Agriculture, Health Care and
Education. The Budget outlines the breakup of expenditure to be K10.6bn
for Operational expenditure while K5.5bn for Capital expenditure. - Total Expenditure is higher than the estimate for 2018 Budget by 9.6%. The
Government aims to focus on key expenditure including SMEs, District
Services Improvement Programs (DSIP), Agriculture, Health Care and
Education. The Budget outlines the breakup of expenditure to be K10.6bn
for Operational expenditure while K5.5bn for Capital expenditure. - Highlights in the Budget include: Health sector K1.5b, Education sector
K1.3bn, Transport sector K1.3bn, Economic sector K742.0m, Administration
K2.0bn, Renewable sector K262.0m, Small Business sector K4.4m,
Tourism sector K50.0m and Provincial sector K3.0bn while funding for
Services Improvement Programs (Provincial Services Improvement
Programs and DSIP) of K1.0bn has been reallocated under Department of
Implementation and Rural Development’s budget. - Total debt to GDP ratio is estimated at 30.3% for 2019 and expected to
reduce to 25.9% by 2023. - The total revenue in the Budget consists of K10.8bn tax revenue, K0.94bn
in grants and K2.5bn from others including dividends, fees and charges. - Total Revenue as a percentage of GDP is estimated to be 16.1% for 2019
and drops over the 5 years to 14.8% by 2023. - Several tax bills were also amended to assist in the Government’s 2019
Budget for revenue such as the Custom Tariff Bill 2018 to increase tariff
rates for a number of imported goods; Exercise Tariff Bill 2018 that
recommends to suspend the 5.0% monthly indexation applied to alcohol
base rates, tobacco base rates and an amendment to remove several
exercisable luxury items under “other goods” such as TVs and microwaves,
will be now considered as household needs. - Other highlights include the reduction of personal income tax and GST zero
rating removal for companies exposed to the resources sector. The taxfree
threshold has been increased from K10,000.00 to K12,500.00 per
annum. All supplies made to mining, petroleum or gas companies will now
be subject to the full 10.0% GST rate. - National Airports Corporation (NAC) signed contracts worth around
K220.0m for Madang, Wewak, Vanimo, Wapenamanda, Tari, Tokua and
Nadzab Airports. The signing of contracts for the airport projects were under
the Government’s Civil Aviation Development Investment Program in
partnership with Asian Development Bank. The funding allocation are
Madang-K77.5m, Wapenamanda-K38.56m, Wewak-K50.9m and Vanimo-
K35.9m. - Kina Asset Management’s Net Tangible Asset as at 31 October is at K1.29
- This week’s BPNG auction in Central Bank Bills were over-subscribed by
K28.0m out of the total amount offered K329.5m. This indicated that there
was an increase in appetite for shorter dated securities. The weighted
average yield for 28 days remained unchanged at 1.39% from the previous
week while there were no bids for 63,91 and 182 days. - This week’s BPNG auction in Treasury Bills were under-subscribed by
K159.2m out of the total amount offered K236.4m. This indicated that there
was a decrease in appetite for longer dated securities. The weighted
average yields for 182, 273 and 364 days remained unchanged at 4.73%,
6.75% and 8.05% respectively from the previous week. There were no bids
for 63 and 91 days. - The KSi Index ended the week lower by 0.1% to close at 5,411.96 points
underpinned by the fall in share price of Oil Search by 0.2% at K20.45 while
the KSHi Index remained unchanged from the previous week at 11,441.71
points.