PORT MORESBY - When Peter O’Neill came to power in 2012, Papua New Guinea’s debt was K8.5 billion. When he left in 2019, the figure was K37.6 billion.
So the debt was 4.4 times larger after only seven years. K29.1 billion larger. Not double, not triple, not even quadruple – an extraordinary 4.43 times larger.
Over the next five years of the economically responsible Marape-Steven government, debt is expected to increase by only 0.3 times – what a difference!
People are jumping up and down on social media claiming that all O’Neill’s new debts have been for new projects. This is a lie.
O’Neill’s debt legacy is not just K29.1 billion more debt. K20.7 billion of this new debt has not been for development projects. I repeat - not for development projects.
O’Neill’s increased debt trap consists of K18.1 billion in straight budget deficit financing, and another K2.6 billion in a previously hidden build up in arrears.
Those who support O’Neill and his debt trap legacy need to put their focus on this massive build-up in bad consumption based debt of K20.7 billion, not on arguments about the much smaller build-up in project or investment debt.
So can the O’Neill defenders, including failed former ministers, please justify this K20.7 billion increase in consumption debt?
Overall, at the end of the O’Neill term, the debt hole of K37.6 billion consisted 64% of budget deficit financing, 7% for outstanding arrears, 6% for project financing kept off government books, and only 23% for project financing that was initially in the budget.
This is an extraordinary debt trap legacy. Not just many badly selected and over-priced contracts. At least an over-priced project may still help the economy. Instead, over 70% of the legacy is budget deficit financing and arrears.
The Marape-Steven government is taking deliberate steps to reduce the rate of building up debt as part of its comprehensive economic reform program. This includes budget repair so we start living within our means again.
Budget repair will take many years but we are starting to take back PNG for the sake of our children.