This is the view of the BDO Budget Bulletin, which noted that the theme of the 2018 budget was ‘review our priorities, refocus our energies and reinforce our strengths'.
Accounting firm BDO says the economic conditions are still being adversely affected by the foreign exchange imbalance, constraints on domestic public expenditure and the accumulation of arrears payment.
The 2018 budget is guided by the government's new Medium Term Revenue Strategy (MTRS) 2018-2022 which incorporates several recommendations from the PNG Taxation Review in 2015 and a recent report by the International Monetary Fund on PNG's tax administration, policy and legislation, the Alotau Accord 2 and the government's 100-Day Plan.
BDO says the economic growth in 2018 is expected to be at 2.4% (2017: 2.8%), driven by the non-mining sectors, feeding off the impetus from APEC related spending across the non-mining sectors and continued improvement in the agriculture, fishery and forestry, which reflects an expected good year for coffee and increased copra and copra oil production.
Inflation is projected to be 6.9% (2017: 5.9%). This reflects the increase in import tariffs and excise rates on specific items in the 2018 budget, higher spending on goods and services during APEC preparations and Leaders' Summit and the gradual improvement in domestic economic activity as well as the gradual improvement in global commodity prices.
The key economic indicators for 2018 are projected as:
• Real GDP growth 2.4%
• Real non-mining GDP growth 3.1%
• Inflation 6.9%
• Crude oil price (US$ per barrel) 51
• Copper price (US$ per tonne) 5960
• Gold price (US$ per ounce) 1281