Vila Times

PNG’s total debt stands at US$7.4 bln

PNG’s total debt stands at US$7.4 bln
PNG’s total debt stands at US$7.4 bln
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Deputy Prime Minister and Treasurer Charles Abel has reiterated that the nation’s total debt stands at US$7.4 billion (K24 billion).

Abel said a total Government loan of US$250 million (K813.82mln) from the Asian Development Bank and World Bank was to finance the 2018 budget, The National reports.

“We are trying to stay within our means of the prudence guidelines through the Fiscal Responsibility Act brought in by the previous government,” he said.

“We are trying our best to live within those means and that is 30 to 35 per cent debt to gross domestic product (GDP) ratio is what we try to stay in between and it is conservative in global terms.

“And how did those developed countries get to where they are if they didn’t utilise it themselves?

“Even today those developed counties, many of them have in the order of over 100 per cent debt to GDP ratio.”

Kavieng MP and Finance and Treasury shadow minister Ian Ling-Stuckey and Namatanai MP Walter Schnaubelt had asked Abel to reveal PNG’s debt.

“The issue is that the Government has admitted that there has been somewhat too much reliance on domestic financing, especially short-term domestic financing which has other implications,” Abel said.

“That is why part of the strategy we are doing at the moment is restructuring the debt. And I have said many times in the House of the different source of debts that we are going through.

“That includes the ADB and World Bank. We got US$100 million (K326m) from ADB and US$150 million (K489m) from the Word Bank to support our national budget.

“The idea is to restructure the debt to reduce the role of the risk in terms of relying too much on domestic financing.

“However, if you go overseas, there are other risks as well.

“There is foreign exchange risk because you are subjecting yourself in repayments to an overseas currency which leads to fluctuation. In which when the exchange rate goes down you are exposed to foreign exchange risk so you have to maintain the balance.

“But we are doing our best to get the costs of financing down.

“Whether you talk about the Chinese Exim Bank or World Bank or ADB or other European banks, the interest rates operate at a very similar nature of concessional rate and it is in the order of up to 3 per cent.

“That is what we try to maintain in concession funding.

“At the end of the day, one has to rely on borrowing to supplement our revenue resources while we grow our revenue budget.

“But the Government is doing it responsibly.

“There have been no rise in tax, for example, despite recommendation from the tax review committee in terms of adjusting goods and service taxes.”