PNG Government to borrow another US$300 million loan

THE Papua New Guinea Government will be seeking a further US$300 million (K974m) loan from the Asian Development Bank to support the budget.

Country's Treasury Minister Patrick Pruaitch had announced that he held discussions with the ADB’s director general Xianbin Yao during his recent visit to Papua New Guinea.

“One of these discussions included a possible $300 million budget support. This assistance will enable the Government to restructure the domestic debt portfolio to keep the government’s debt stock at prudent levels. “

“Though this assistance from ADB and other multilaterals are concessional policy based loans, such loans do add to the country’s debt exposure.”

Mr Pruaitch said without restructuring and rebalancing the debt portfolio, the government’s ability to service its debt will deteriorate resulting in undesired consequences.

“This could happen if corrective action such as debt restructuring does not happen.”

He said this last week during signing of the $122 million K396.1m) loan, part of the $400 million (K1.29 billion) multi-tranche financing facility approved in 2008 for the Highlands Road Rehabilitation and Improvement Investment Program.

The government at the last sitting of parliament in August introduced corrective measures including the introduction of the supplementary budget aimed at restoring the 2016 Budget to a prudent, responsible and sustainable fiscal path for the remainder of the year and beyond.

Corrective measures were taken when PNG like many commodity-dependent exporting economies were hit hard by depressed prices, are experiencing slowing growth, widening fiscal and external deficits, and some combination of exchange rate depreciation and declines in foreign reserves.

The government’s management of the economy despite the external shocks had been widely commended by leading global financial institutions and rating agencies.