The Papua New Guinea Government will use low interest loans from the Asian Development Bank and World Bank to deal with its record levels of debt.
The Government wants to shift its debt from commercial to concessional loans to reduce its high interest costs and has announced a new fiscal strategy in conjunction with the International Monetary Fund to stabilise debt and recover from a revenue collapse, ABC News reports.
“For many of us, the effects of the slowdown of economic growth have been underestimated,” Treasurer Charles Abel said.
“We didn’t realise it would be so long-lasting and impact us in the way that it has.
“We are trying our best to maintain the discipline, to live within our means.”
The Government also hopes the shift will help solve PNG’s longstanding problems with foreign exchange.
It has again promised to pursue a US dollar sovereign bond issue, after difficulty finding any market appetite over the previous two years.
The Government slashed spending over the previous two years, but is now introducing a 1 billion kina ($400 million) “stimulus package” with a 100 million kina ($40 million) State Equity Fund to partner with private investors on agriculture projects.
On top of that, it is introducing tariffs for items it hopes to produce locally, such as dairy products, and increasing tariffs on things like eggs and meat.
In its 2018 budget, PNG has again asked its tax and customs agencies to collect more revenue to help with its 2 billion kina ($800 million) deficit.
The PNG Government has also allocated a further 300 million kina ($120 million) towards hosting the 2018 Asia Pacific Economic Cooperation (APEC) Leaders’ Summit, something Australia is spending $100 million supporting.