Sir Mekere accuses PM O'Neill for manipulating Central Bank

Statement
The latest data released by the Bank of Papua New Guinea shows that the central bank has been printing money for the government, fuelling its wasteful spending.

“The central bank has irresponsibly financed the budget deficit, covered up and facilitated Prime Minister Peter O’Neill’s waste and mismanagement,” former prime minister Sir Mekere Morauta said yesterday.

“It has contributed to the growing mountain of public debt created by Mr O’Neill – in other words, the central bank has colluded in the imprudent financial activities of the O’Neill Government.”

In 2016, according to data in the BPNG’s Quarterly Economic Bulletin, the bank lent almost K2 billion to the government. Net lending to the government was K800 million in December alone.

The Central Bank has lent that money to the government because there is no appetite in the private sector – commercial banks, superannuation funds and other investors – to buy its debt instruments such as T-Bills.

“The new data from the Bank of Papua New Guinea demonstrates clearly how the Prime Minister and his economic advisers have controlled and manipulated the central bank to the point where it has become an inanimate puppet,” Sir Mekere said.

“I call on the Board of the central bank to review and investigate the Governor’s decisions and actions and, if warranted, recommend his dismissal.

“The position of Governor is subject to the Leadership Code, so the Ombudsman Commission should also investigate the Governor’s compliance with the law and the bank’s objectives.

“One of the first things a new government should do, is to institute an audit of the bank to restore its independence, and take measures to protect it from future political interference, increase the oversight powers of the Board and review the powers of the Governor.”