THE government of Peter O'Neill has passed Papua New Guinea's largest budget ever, capping a tumultuous fortnight in the Pacific nation.
The 10.5 billion kina ($A4.6 billion) budget, handed down on December 6 but held up by the political crisis that has gripped the nation, was passed on Wednesday, the Post-Courier newspaper reported.
Treasurer Don Polye said the 2012 budget was a record for the country and 13 per cent higher than the 2011 budget compiled by the government of Sir Michael Somare, the paper said.
Education received the largest funding of 649 million kina, in line with the O'Neill government's promise to provide free education to children up to year 10.
It included 47 million kina for education infrastructure.
Meanwhile, Prime Minister O'Neill said money to pay school fees for students had already started going into bank accounts of all schools, the paper reported today.
The money started going into accounts yesterday, drawn from funds allocated for education in the 2010 supplementary budget.
The passing of the budget follows a fortnight of political upheaval in PNG, sparked by the Supreme Court's decision to reinstate Sir Michael as prime minister after finding Mr O'Neill's August 2 election was unconstitutional.
Mr O'Neill refused to recognise the court's December 12 decision, and the country briefly entered stormy waters that left it with two governments, two governors-general, two police commissioners and two prime ministers.
On Monday, Mr O'Neill was recognised by Governor-General Sir Michael Ogio as the nation's only prime minister, with the backing of 75 out of 109 members of parliament.
Sir Michael Somare has continued to insist he is prime minister, but it is unclear what his next move will be.
Meanwhile, Mr O'Neill released his Christmas address yesterday, in which he said: "The truth of the matter is that the deposed Somare government's power base, small as it was, has crumbled."
Mr O'Neill pledged to "fight to the last straw to keep the forces of darkness out of government".
"The nation has picked itself up through its elected MPs, dusted ourselves and moved on to do better things for our nation," he said.
PNG, which is due to hold national elections next year, has experienced months of political uncertainty since Sir Michael left the country for heart surgery in April.
On the day of the Supreme Court decision, parliament passed retrospective laws legalising Mr O'Neill's prime ministership.
It also revoked Sir Michael's membership of parliament, dumping him from the seat he has held for more than 40 years.
Court challenges to Mr O'Neill's retrospective laws are expected in the new year.
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