PNG considers budget stabilisation fund from LNG revenue

AUDIO from Pacific Beat

Concerns raised over optimism arising from expected revenue from LNG project

Created: 23/06/2009

Linda Mottram

Last Updated: Tue, 23 Jun 2009 21:52:00 +1000

Papua New Guinea's Ambassador to Australia has signalled a budget stabilisation fund could be favoured for the expected windfall from Exxon Mobil's planned liquefied natural gas project.

But economists have warned predictions of a doubling or tripling of the country's economy as a result of the plant are overly optimistic.

They' have also warned against the temptation to begin spending the windfall before the project's been confirmed.

Ambassador Charles Lepani says PNG has enough experience to properly handle the expected income.

"During the Bougainville days, because of the large anticipated large flows to the budget, it was a budget stabilisation fund," he said.

"When the prices go up, you save some money, and when it goes down you supplement the budget."