• PNG Business News

James Marape asks for $300m pa in direct budget support

Papua New Guinea Prime Minister James Marape has suggested Australia give up to $300 million a year to PNG in direct budget support, as he confirmed he was considering refinancing his entire government debt — potentially with China.

Mr Marape, who is meeting with a delegate of six Australian ministers today led by Foreign Minister Marise Payne, said PNG was seeking “any element of help Australia can give us” to get on top of its budget difficulties.

“At the moment (Australia) are giving, in a headline figure, over $600 million in terms of aid every year. If half of that or quarter of that comes into budget support, even better for us,” Mr Marape said in Port Moresby today.

He said anything left over from budget support “can be geared towards plans that we have identified as a country”.

In addition to budget support, Mr Marape said his government to consolidate its 28 billion kina ($A11.8m) in public debt.

“Whether it is China or India or Australia, the cheapest help we can get, the best help in terms of the terms of loan. I am in the business of refinancing my entire loan portfolio for the country,” he said.

“Over time, since 1975, loans have been part of our government budgets, and it has accumulated to a total of about K27bn now …

“I’m looking to soft facilities out there, at best terms to PNG, without compromising our national sustainability and national integrity going into the future.”

The confirmation that PNG could secure Chinese help to refinance its public borrowings will ramp up pressure on Australia, with strategic experts warning of the dangers of China holding a substantial portion of PNG debt.

Mr Marape’s office had previously branded as “fake news” reports that he was seeking to refinance his government’s debt with China, after an “unauthorised” press release was issued by his office following a meeting with China’s ambassador to PNG.

Finance Minister Mathias Cormann, Defence Minister Linda Rey­nolds, Immigration Minister David Coleman, Pacific Minister Alex Hawke and Deputy Trade Minister Mark Coultan will also attend today’s ministerial forum.

Senator Payne said the forum would provide “an opportunity to hear directly from PNG ministers about the economic challenges they face, including financing”.

“As a neighbour and friend, Australia continues to work in partnership with PNG on mutual economic and financial matters, including providing technical ­assistance on economic reforms,” she told The Australian.

PNG has failed to implement promised fiscal reforms required by the World Bank, which is holding back on a second tranche of support after an initial loan of $US150 million to help put the budget on a sustainable footing.

Australian National Univer­sity economist Stephen Howes said PNG was unlikely to get a loan from Australia until it met the World Bank’s conditions.

“Australia won’t move ahead of the World Bank,’’ Professor Howes said. “Our commitment to multilateralism is too deep to allow that to happen, even if there is a China factor at play. To ­unlock funding from the World Bank, PNG needs to get its reform program back on track.”

Australia tightly controls the way in which aid money is spent in recipient countries, with much of it administered by private sector contractors which work on programs to support PNG’s national development plans.

This is seen as vital, particularly in countries where corruption is rife, such as PNG.

However, PNG’s leaders have grown frustrated in recent years over their lack of direct control over the spending, believing the money could be better used on their own budget priorities.

The Department of Foreign Affairs and Trade’s 2017-18 Aid Program Performance Report for PNG found “restorative action” was needed to achieve objectives in two key program areas - “promoting effective governance”, and “enhancing human development”.

Source: https://www.theaustralian.com.au/nation/politics/james-marape-asks-for-300m-pa-in-direct-budget-support/news-story/e4936e068fb3564d1318d8f9ef7097a0

PNG Business News

2nd Floor, Suite 6,

Corinthian Plaza Building,

Paseo De Roxas, Legaspi Village,

Makati, Philippines

Phone: +632 251 5599

Subscribe to Our Newsletter

  • White Facebook Icon

© PNG Business News