Volume 2 Part 3 - Budget 2001

The 2001 Development Budget contained in this volume details public investment in development projects and programs funded by the Government and its development partners.

Despite the very tight financial situation, K1,051.1 million has been appropriated for the 2001 Development Budget. This represents an increase of K95.5 million or 10 percent over the expected expenditure for 2000.

Of the K1,051.1 million, K390.8 million will come from the government, K525.3 million from donor grants and K135.0 million from concessional loans. The level of financing from the PNG government’s own resources and the level of funds secured in new concessional loans will increase significantly in 2001 compared to that for 2000.

The distribution of expenditure in 2001 reflects the Government’s commitment to promote better living standards and economic development by focusing on the development priorities, as defined in the Medium Term Development Strategy and reaffirmed in the National Charter on Reconstruction and Development. The development priorities are primary health care, basic education, maintenance of transport infrastructure, law and order, and income earning opportunities for Papua New Guineans, especially in rural areas.

The key initiative in the 2001 development budget is the introduction of the Development Charter Program. This Program will implement the specific commitments under the National Charter and thereby increase significantly the delivery of basic services. In 2001, K109 million has been allocated under the Program and the key projects to be funded include:

Basic Services Improvement Package

District Aid Post Rehabilitation K13.4 million

District Primary School Infrastructure K13.4 million

Less Developed Districts Support Package K14.1 million

District Roads and Bridges Improvement Package K34.7 million

Planning Systems Support Package K2.5 million

A list of roads and bridges to be funded under the District Roads and Bridges Improvement Project is attached as Table 8 to this volume. As a specific initiative under the Program, additional funds have also been secured for the Government’s ongoing road maintenance project and the Highlands Highway maintenance project.

The projects under the Development Charter Program complement the ongoing development projects in the 2001 Budget that directly or indirectly support the development priorities of the Government. However, aside from the additional resources forthcoming under the Program, its most important role is to signal clearly the Government’s commitments to ensure that development expenditure, both Government and donor funded, are linked clearly to its development policy and priorities.

The detailed costings of the projects are set out in this volume. I commend the 2001 Development Budget to Honourable Members of Parliament.

Hon. Sir Mekere Morauta, Kt, MP

Prime Minister and Treasurer

For 2001, K1,051.1 million has been appropriated for the Development Budget. This appropriation represents a marked increase of K137.7 million, or 15.1 per cent, on the expected level of expenditure in 2000. The appropriation for 2001 is equivalent to 9.6 per cent of GDP, which compares with the expected outcome for 2000 of 9.3 per cent of GDP. This increase is in line with the Government’s strategy to increase, on a sustainable basis, the real value of resources directed to development expenditures.

The Development Budget for 2001 will comprise K390.8 million in financing from the PNG government’s own resources, K135.0 million in new concessional project loans and K525.3 million in donor grants. The level of financing from the PNG government’s own resources and the level secured in new concessional loans will increase significantly in 2001 compared to that for 2000.

The key initiative in the 2001 development budget is the introduction of the Development Charter Program. This Program will implement the specific commitments under the National Charter on Reconstruction and Development and increase significantly the delivery of basic services to Papua New Guineans. The Program also reflects the Government’s strategy to ensure that development expenditure is based clearly on a coherent and consistent development policy framework. In 2001, K109 million has been allocated under the Program and the key projects to be funded include:

Basic Services Improvement Package

District Aid Post Rehabilitation K13.4 million

District Primary School Infrastructure K13.4 million

Less Developed Districts Support Package K14.1 million

District Roads and Bridges Improvement Package K34.7 million

Under the Program funds will also be provided to support the design and implementation of a uniform planning system and strategic activities that will promote economic growth over the longer term. As well, under the Program additional funds have been secured for the Government’s ongoing road maintenance program (see chapter xx for further details on the Development Charter Program).

Through the introduction of the Development Charter Program, in the 2001 Development Budget there has been an improvement in the allocation of resources to the priority activities identified under the Government’s development policy framework (Table xxx).

The 2001 Development Budget and Priority Activities

ACTIVITY	BUDGET ALLOCATION (K millions)	SHARE OF TOTAL (%)
Basic Education	157.2	15.0
Primary Health	147.5	14.0
Infrastructure with a focus on Maintenance	351.5	33.4
Primary Industries	115.4	11.0
Law and Order	47.3	4.5
Capacity Building	114.6	10.9
Other	117.5	11.2
TOTAL	1,051.1	100.0

As shown in Table infrastructure projects with a focus on maintenance activities receive the largest share of the 2001 budget. Road maintenance accounts for the bulk of this category. Significant resources have also been allocated to the priority activities of basic education, primary health care, primary industries and law and order.