Abel acts

Some things have to change – Treasurer

TREASURER Charles Abel admits some changes in government direction are necessary to manage an economy under huge strain.

Mr Abel from the ruling People’s National Congress party has been promoted to treasurer and deputy prime minister in a new caretaker cabinet of the coalition government which emerged from the recent election.

Having been elected as prime minister again when PNG’s 10th parliament sat for the first time on Wednesday, Peter O’Neill has rewarded Mr Abel for his work in charge of the Ministry of National Planning over recent years.

Seen as one of the most talented MPs in PNG’s diverse parliament, the Alotau MP has his work cut out for him in the Treasury role.

Treasury this week released its Mid-year Economic and Fiscal Outlook which revealed a budget blowout of more than a billion kina [$US309 million] amid collapsed revenues and higher than expected expenditure.

On the ground, PNG’s grassroots communities are struggling. There are few jobs available. Most hospitals are experiencing drastic shortages of basic supplies. Education is free but schools across the country are barely able to function for lack of resourcing. Teachers, doctors, public servants, police and others hardly ever get paid regularly.

The O’Neill-led government which ruled in the five-year term that finished with last month’s election tended to blame PNG’s economic woes since 2014 on slumps in global commodity, oil and gas prices, as well as prolonged drought.

The new Treasurer echoed this, but conceded the government had to be realistic about the way it had been conducting itself.

Mr Abel said that as he moved into the Treasury portfolio there would be a review of government processes: looking at revenue streams, fulfilling the budget and the status PNG’s deficit. According to him, there were certain things that had to change.

“We’ve got to realise that there’s a limit to borrowing. We’ve got to realise that we’ve got to live within our means,” he said.

“I think some of our procurement processes, and some of our investments into infrastructure are good, but there needs to be perhaps more emphasis on other aspects of human development and get back to some of the basics: like ensuring there’s medicines in our hospitals, ensuring that whilst we provide access to education, it’s quality education.”


Since the start of the year, PNG’s public debt has blown out from 21 billion kina [$US6.5 billion] to 25 billion [$US7.7 billion], or 29 per cent of GDP to 34.5 per cent.

It became more clear that Mr O’Neill’s positive spin about the economy in the past two years was not the full picture when the previous treasurer, Patrick Pruaitch said in April that the economy had “fallen off a cliff”.

He blamed the government’s spending spree for exacerbating an economic rut where jobs in the formal sector had been plummeting since 2014.

The mid-year outlook released this week from the PNG Treasury was another glimpse of the real state of a national economy that had been grossly mismanaged, according to Paul Flanagan, an Australian economist with a long interest in PNG’s economy.

According to him, the government had already implemented spending cuts in certain sectors, but would need to do more.

Mr Abel wouldn’t be drawn yet on whether there would be more cuts to the public service, but said there would be some challenging times ahead.

“It is my intention over the next few days and leading into the first full session of parliament to come out with some pronouncements around what we are going to do,” he said, adding that the economy was the first item on the government’s priority list.

“But there’s not going to be any knee-jerk reaction. There’ll be a considered series of actions. I want to announce a one hundred-day plan, including some short term measures and also some medium and longer term measures.”

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