THE Government’s commitment to eliminate its budget’s deficit by 2017 “does not seem like a credible promise”, an Australia National University academic says.
ANU development policy centre director Stephen Howes queried the K2.3 billion deficit tabled in Parliament on Tuesday by Treasurer Patrick Pruaitch and raised some questions after analysing it. “Will Government expenditure really be cut by 20% in the run up to the 2017 election?” he said. “Nevertheless, it does appear that the expenditure boom is over.” He said even if a balanced budget was not achieved for many years, meeting the 30% debt cap from next year onwards “will be a significant challenge”. Howes said it was budgeted to be achieved in 2015 only on the basis of a massive K2.5 billion asset sale. “This is apparently the sale of the landowners’ equity share in the LNG project. But whether the landowners agree to buy equity they already in effect own remains to be seen. “If they don’t, either the debt target will be blown, or there will need to be further expenditure cuts. And revenue growth is projected to be slow, despite the LNG project.” Howes said the Government’s expenditure doubled between 2003 and 2008, and between 2008 and 2015. According to Howes, the expenditure in 2015 “is budgeted to increase by only 7%, or just 1.5% after inflation, compared to an annual average increase after inflation of 8.4% for the last five years”.
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