Pacific needs more than Morrison's thanks
Kumul legend David Noifa dies at 56

Cash crunch as debt repayment soars

James marape
James Marape and Australian high commissioner Bruce Davis - PNG's problems are bound to be Australia's problems too

| Reuters

SYDNEY & WELLINGTON - Papua New Guinea’s annual debt repayments to China are forecast to increase 25% by 2023, new budget figures show, at the same time as the Pacific nation falls to its largest ever deficit.

The resource-rich country, which is at the centre of a diplomatic tussle between China and the United States, has blamed extravagant spending by the previous administration for its souring finances, which will require the government to borrow even more to pay the bills.

Balancing its books has been made more difficult by recalculations to the country’s outstanding debt. It has soared 10% since the last annual budget to 42% of gross domestic product, above the legal limit of 35%.

“You have some of those loans clicking in; the repayments are going to be a problem,” said Paul Barker, executive director of Port Moresby-based think tank the Institute of National Affairs.

Formerly administered by Australia, PNG has in recent years turned increasingly to China for financing as Beijing becomes a bigger player in the region.

The US has repeatedly warned that China was using “predatory economics” to destabilise the Indo-Pacific; a charge strongly denied by Beijing.

Although the total debt owed to Beijing was not disclosed in PNG’s budget documents released on Thursday, repayment schedules show China is by far the biggest bilateral creditor, with annual repayments to the Asian giant projected to increase 25% to about K160 million by 2023.

Treasurer Ian Ling-Stuckey said that past excesses, including extravagant spending linked to hosting the Asia-Pacific Economic Cooperation forum last year, were emblematic of the financial problems that had been building up.

“At that time, we were in the midst of the APEC extravaganza with our new APEC Haus, red carpet, fancy new roads all focused in Port Moresby, and Maseratis,” he said in a speech delivered to parliament on Thursday.

“Now, we have a new prime minister that travels economy class.”

The purchase of a luxury fleet of cars during the forum, including 40 slick Maserati Quattroporte sedans, sparked public protests at the time, given the country is beset by poverty.

Prime Minister James Marape took over as leader in late May after Peter O’Neill lost the support of the parliament following almost eight years in power.

Adding to the fiscal strain, income from the country’s natural gas sector has also repeatedly come in below forecasts.

PNG’s total expenditure in the 2020 budget is forecast to reach a record K18.7 billion against an anticipated K14.1 billion in revenue, creating the largest deficit it has ever faced, according to budget documents.


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Philip Kai Morre

How can we bring back PNG with such a massive loan to be paid back. It will take years as interest accumulates and we keep borrowing.

Where have all our natural resources gone to? If it means getting to the living standard of first world countries we have to stop borrowing.

And no more new mining and selling off our natural resources until our political and economic system improves.

Furthermore, can the government ask China or any other countries who have debts with us to have pity on us and reduce the rate. They have taken too much of our natural resources.

Leigh Dixon

In support of Robin Lillicrapp’s comments perhaps the avenues of enquiry that a police investigation could commence with, rather than a commission of enquiry, could be a re-evaluation of:

• The findings of the 2015 commission of enquiry into the National Provident Fund and in particular what happened to the referrals to other agencies made by the commission

• The findings of the 2018 administrative inquiry into the K46 million Manumanu land deal

• The Ombudsman Commission Report into the UBS AG Loan

• The circumstances around the 5 March 2009 transaction, whereby the government mortgaged its shares in Oil Search Ltd with the International Petroleum Investment Company, Abu Dhabi and the subsequent disbursement of those funds

There are of course other matters that could be listed but the above matters are a good starting point.

There is certainly sufficient legislation in PNG covering money laundering and mutual assistance in criminal matters.

As Robin said: “Recovery of the monies flowing south”.

Let’s not also forget the support that can be obtained from the AML/CTF National Coordinating Committee.

Robin Lillicrapp

For all the aid flowing north from Australia, there seems little is said about prevention and recovery of the monies flowing south from PNG to investment hidey holes; perhaps, negating purpose and fulfillment of aid projects.
I wonder if PM to PM, during Mr Marape's recent visit, was there discussion about tracking those treasures?

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