By Ilya Gridneff AAP 16/11/10
The Papua New Guinea government continues to ride the resource boom, handing down its largest ever budget of nearly 10 billion kina (A$4 billion).
PNG Treasurer Peter O'Neill announced on Tuesday the 2011 National Budget of 9328.1 million kina ($A3731.2 million) had been boosted by a supplementary budget of 653.3 million kina ($A261.3 million).
"This announcement of nearly 10 billion of expenditure is the biggest spending announcement ever witnessed in PNG and provides us with a great opportunity to build up our nation," Mr O'Neill said.
"The outlook for 2011 is very positive, with the PNG economy forecast to grow by eight per cent, which represents 10 years of uninterrupted economic growth," he said.
PNG's strong economic positions stems from the prolonged mineral boom and a massive ExxonMobil-led Liquefied Natural Gas that will come online in 2014 and bring billions in revenue for the next 30 years from gas sales to Asia.
"We can not underestimate the opportunity the PNG LNG project offers to transform our economy and substantially improve our socio-economic development," Mr O'Neil said.
But the "balanced" budget warns "the emergence of LNG as a major revenue source will give rise to macroeconomic pressures," he said.
PNG inflation in 2011 is estimated to average around 8.2 per cent, he said.
Resource-rich PNG has failed to translate its numerous mineral-related revenue streams into real development for its population.
Chronic underfunding for police, the courts and jails has fuelled a law and order problem and has led to a heavy reliance on aid, including more than A$457 million annually from Australia.
This budget saw increased funding to all the key areas outlined in PNG's development strategy.
Education and health were winners with 139.9 million kina (A$55.9m) and 90.5 million kina (A$36.2m) respective increases while the government will provide 121.2 million kina (A$48.5) more to the transport sector, mainly for much needed road building.