THE reckless and unnecessary borrowing of prime minister Peter O’Neill is hurting families and crippling the nation with debt that future generations must pay.
Under O’Neill, in 2015 actual government debt reached K18,571.40 per Papua New Guinean household.
That number will increase with new borrowings proposed by the prime minister, including the $1 billion sovereign bond issue.
Families must repay O’Neill’s debt whether they like it or not.
Repayment will require new domestic revenue raising and cost savings, including:
Higher personal and corporate taxes as well as a 50% increase in GST;
Increases in state-owned enterprise fees and charges such as O’Neill’s secret rises for all Motor Vehicles Insurance Limited services including registration and insurance;
A further decline in government services and outsourcing of service provision to the prime minister’s colleagues and cronies;
A fire sale of government assets and equity including state-owned enterprises such as PNG Power and Air Niugini to the prime minister’s colleagues and cronies;
Further cuts to essential spending in areas such as health and education;
Tighter limits on public service hiring and reductions in public service wages and conditions.
When O’Neill took office in 2011, official government debt was estimated at a sustainable K7 billion. Today actual debt under O’Neill has exploded to K27 billion.
In condemning the nation to poverty for many years to come, the prime minister may be breaking the law.
The official debt he admits to, approximately K17.8 billion, is 39.4% of GDP.
This is well above the limit of 35% for emergency situations set by the Fiscal Responsibility Act. It is even further above the general limit of 30% set by the Act.
But the prime minister is hiding the truth about this debt – it is in fact much higher than he says.
If borrowings such as the illegal and corrupt UBS loan, the Chinese Ex-Im Bank loan, borrowings by state-owned enterprises and contingent liabilities such as court settlements are taken into account, actual debt is K27 billion.
That is 59.7% of GDP.
It is on this basis that the unsustainable debt burden must be calculated.
It equals K3,506.49 for every one of the 7.7 million men, women and children in Papua New Guinea. It equals 18,571.40 for each of the families in the 1.5 million households of Papua New Guinea.