2 weeks Ago By postcourieronline
THE International Monetary Fund (IMF) has praised Papua New Guinea’s tax reforms, saying they are starting to bear fruit and contributing to the country’s fiscal sustainability. The IMF rep in PNG Sohrab Rafiq in an interview said the PNG authorities’ tax policy and administration reform efforts, in line with their Medium-Term Revenue Strategy (MTRS), have aimed at reducing distortions, simplifying and modernising the tax system, and improving tax services. These efforts have resulted in the successful halving of the fiscal deficit since the pandemic, from 8.
9 percent of GDP in 2020 to 4.3 percent in 2023, with an additional 0.4 percent of GDP deficit reduction expected this year.
The authorities objective is to reach a balanced budget by 2027. IMF was asked about the assessment of the implementation of the recent tax reforms in PNG, and what recommendations did it have for ensuring the country’s fiscal sustainability in the long term. “The authorities’ tax policy and administration reform efforts, in line with their Medium-Term Revenue Strategy (MTRS), are starting to bear fruit.
“This includes reforms aimed at reducing distortions, simplifying and modernising the tax system and improving tax services,” Rafiq said. “These efforts have contributed to the successful halving of the fiscal deficit since the pandemic, from 8.9 percent of GDP in 2020 to 4.
3 percent in 2023, with an additional 0.4 percent of GDP deficit reduction expected this year. “The authorities’ objective is to reach a balanced budget by 2027.
“To continue ensuring fiscal sustainability going forward, the authorities’ current strategy, underpinned by (i) sustained revenue mobilisation efforts, (ii) expenditure rationalisation and efficiency gains, and (iii) a prudent borrowing plan, is appropriate. “If approved by the IMF Executive Board, the new Resilience and Sustainability Facility (RSF) arrangement will help enhance PNG’s resilience to climate change, including by supporting stronger disaster risk management capacity, thereby contributing to PNG’s long-term fiscal sustainability,” he said. To continue ensuring fiscal sustainability going forward, the IMF recommended that the authorities maintain their current strategy, which is underpinned by sustained revenue mobilisation efforts, expenditure rationalisation and efficiency gains, and a prudent borrowing plan.
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