Thursday, 22 November 2012

Deloitte Welcomes 2013 National Budget

One of Papua New Guinea’s major accounting firms, Deloitte has welcomed the Government’s K13 billion national money plan, describing it as a “brave budget” premised on “sound analysis of the current economic climate”.

Treasurer Don Polye handed down the country’s national budget on Tuesday, indicated that the government’s focus would be directed significantly towards the provincial and district levels.
The Treasurer also highlighted the government’s intention to realize budget plans through the improvement of the country’s Medium Term Development Plan (MTDP) enablers including education, health, infrastructure development, and law and order.    

And while noting the government’s altered focus, Deloitte expressed reservations with certain aspects of the budget, stating that “there has been no great emphasis on power generation as an area of infrastructure development”.

Questions were raised by Deloitte as to whether PNG Power Limited would have to fund its development programs though the much touted Private Public Partnership concept, suggesting that the energy sector did not seem to have the same emphasis as “other key infrastructure areas”.

However the Deloitte assessment was more positive of the governments continued focus on what it termed the “historically poor financial performance of its State Owned Enterprises”, particularly where the government intends to improve on the performance of SOEs through 10 core principles recently identified by authorities.

As part of its comprehensive analysis of the 2013 National Budget, Deloitte also considered issues such as the ability of the government to raise domestic capital to finance an expected K2.6 billion deficit; additional appropriations for trust accounts to sustain public expenditure over several years, and its view of recent economic performance and budgetary assumptions.

The company’s overview of the Budget’s taxation and customs measures was particularly positive on the aspect of tax administrators recognizing ‘“Nil” tax notices as “assessments” for certain tax purposes’.

It also welcomed the government’s move to restrict Provincial governments from enacting sales and service taxes outside of the national governments tax regime, opting to penalize provinces by removing defaulting provinces of their entire “GST entitlement under national revenue sharing laws, and (redistributing) that revenue amongst all other provinces that do not have such taxes in force”.

The 2013 National Budget was passed into law yesterday amidst much disappointment from the opposition.

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