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Economist hails budget

Felix Chaudhary
Wednesday, November 28, 2012

THE 2013 National Budget will address several key issues that have long plagued the country and paramount would be the upgrade of infrastructure which would address long overdue problems, facilitate economic growth, and boost investor confidence.

This is the view of University of the South Pacific economist Professor Biman Prasad.

"The focus on improving infrastructure is important and will address issues we have been fraught with over the past 15 to 20 years in regards to roads and water supply," he said.

"We raised an argument two years ago that the proportion of expenditure on capital works versus operational costs was very poor. There was always a focus on operational expenditure and much less on overall capital expenditure. The positive aspect of this budget is that 30 per cent of total expenditure or $722 million that has been allocated for capital works will correct the neglect on the expenditure on infrastructure over the past few years."

Prof Prasad said it was also important to look at the projected 2.8 per cent net deficit of $218m as an investment and not as expenditure.

"People may look at the deficit as a downside of this budget because it means the government has to borrow thus leading to the increased deficit. But borrowing is not necessarily a bad thing when viewed in the context that in the past borrowing used to go into operational expenditure whereas in this case if the borrowing is really used to improve and build infrastructure, then I would say it is productive expenditure," he said.

Prof Prasad also outlined the positive impact that infrastructure improvements and government's affirmation of elections in 2014 could have for boosting investor confidence.

"We are moving towards a situation where we are increasing investor confidence in the country.

"This started with the constitution consultation process and further strengthened by government's $11m budget for election.

"Government has stated that there is no deviation from the move towards elections and if things progress as planned then we can expect to see increased confidence in the country and increased investments from the private sector as a result," he said.





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