PNG plans $1.3 billion in spending

PAPUA New Guinea has produced a budget for 1991 which empha sises growth in the private, non mining sector. Overall spending is planned at K 1.31 billion (US$l.3B billion), down 3.4 per cent in real terms.

The main points are: import bans in some areas have been replaced by high tariffs, work permit fees have been reduced from K5OO to KlO (a real volte face for the Government), new payroll training levy of two per cent, boost to industry with the removal of import duties on manufacturing inputs, and cigarettes and spirits are to be more heavily taxed.

Nowhere is the unpredictable nature of Papua New Guinea politics apparent than in one of the main thrusts of the new budget. Politicians, including some min isters, are frequently attacking foreign business interests (remember that de

mand that all coffee exporting countries sell up, made under the previous govern ment, or a minister’s call earlier this year for widespread nationalisation?). But the budget has signalled the abolition of import duty on 344 items as part of an initiative to attract more wealthy foreigners to set up business outside the mining sector.

Some of the items affected previously attracted duty of 50 per cent now exempt are capital equipment for manu facturing, raw materials needed for processing, breeding stock, seeds, various chemicals and fertilisers, printing ma chinery and fishing vessels.

To help replace the lost income, the Government has imposed a three per cent manufacturers’ tax which will be applied on the retail value of goods produced locally. This tax is expected to raise Kl 2 million a year by 1992.

allowed to enter Papua New Guinea will have their bans lifted gradually, but will f^ so be subject to high tariffs. These include honey, toilet soap, vegetables, pork, matches, wooden doors, eggs,

poultry.

Finance Minister Paul Pora said he expected the prices of the major agricul ture exports to stabilise or even increase slightly during the year, with copper

prices falling but gold remaining con

stant. The budget is being viewed by analysts as more realistic than its prede cessor, when the Government went against the advice of officials and built into the 1990 Budget the assumption that the Bougainville copper mine would re open during this year. The latest measures signal that Papua New Guinea is moving more towards an open econ omy, looking to replace controls an imports with tariffs thus allowing the market forces to decide rather than

economic planners.