Maipakai doubts K1 billion IMF Loan addresses PNG Economic Issues

PORT MORESBY: The government’s K1 billion loan (US$250 million) from the International Monetary Fund to address a backlog of foreign currency orders by the companies for imports has been doubted whether it will sustain the economy.

The Opposition’s shadow Minister for Finance Mark Maipakai said the businesses had a backlog of foreign exchange orders still sitting there in the Central Bank.

“The weekly order for the foreign currency is around K800 million.

“The bank only has about US$1.2 billion in the foreign reserve. Here the Prime Minister is trying to borrow US$250 million (about K1 billion). This question is how long will this money sustain our economy?” Mr Maipakai told reporters in Port Moresby today (Monday).

He said PNG was an economy, which was vulnerable to global commodity prices.

The Kikori MP has expressed concerns that the country may be asked to privatise all its assets, saying that is the price which the country must pay when entering into such a loan arrangement with IMF.

“Privatisation is looming as the international bank is only worried about guiding PNG to improve our Debt to GDP ratio to settle some of our credits.

“This is the only way we can revive the economy. The next government will be burdened to repay the debts incurred by this government,” he said.

Maipakai said the nation’s future had been mortgaged, adding ‘the future is bleak.’

“This country has gone to the dogs. There is no future for PNG,” he said.

He recalled late Bill Skate’s government which was under the same party, saying everyone knew that Skate had run down this country.

He further said his successor Sir Mekere Morauta rescued the economy by way of the International Monetary Fund’s structural adjustment.

“He had to borrow from the World Bank and IMF to revive the economy. We were asked to sell off PNG Banking Corporation and others so that is the path which now we are going down.

“All other avenues to revive the economy have failed. The last resort is we are going to IMF. There are certain conditions IMF loans have,” he said.

Meanwhile, he has commended the past government for managing the economy prudently with expenditure cuts on unnecessary areas.

“When I came into office in 2002, I was told by then Prime Minister Grand Chief Michael Somare not to buy luxury cars like VX and our salaries were cut among others.

“Our one Kina then was equivalent to US$0.21. After three years I got a back-dated payment for those I forwent,” he said in a media conference.

Mr Maipakai said they sacrificed only to bail out the economy with the delivery of only one impact project in each of the regions.

He added that these projects earned economic return for the country, saying they laid the economic foundation of the country well and delivered the LNG project.