July 25, 2018

Papua New Guinea Economy strong enough to sustain K24bil debt, says PM O'Neill

Papua New Guinea's economy is strong enough to sustain a debt level of K24 billion, the country's Prime Minister Peter O’Neill says.

O’Neill was responding to Lae MP John Rosso’s question on the high level of debt in Parliament yesterday, saying that PNG had one of the lowest debts to GDP levels for any economy.
The government had admitted that it had a debt of K24 billion.
“On average, we are paying 2.5 per cent interest rate per year and our debt repayments are over K1 billion a year which is affordable given that we have a K12b budget in our country,” O’Neill said.
“A large portion of our debt is concessional borrowing. We get it from International Monetary Fund, World Bank, Asian Development Bank and we borrow from the Exim Banks, all with almost similar interest rates.
“The expensive borrowings that we normally pay are only for the Treasury Bills we borrow from Central Bank.
“It is a financing tool that all governments use to ensure that they finance the budgets that government’s present.
“It’s a normal course of business that the governments conduct with Central bank year-in year-out. That’s the only Treasury Bill that is slightly expensive domestic borrowing that we do,” he said.
O’Neill said the government’s strategy over the past few months had been to borrow more on concession loans to slow down on the Treasury borrowings and cut down on the interest payments to Central Bank.
“If there are going to be any changes, we come back to Parliament and ask Parliament to make those changes,” he said.
O’Neill said over the last seven years there has not been any increase in company or personal tax.
“We have increased the threshold so that those who are doing the hardest in our society are not paying tax.
“Our revenue collection is very much on target as we had estimated in the 2018 Budget and I can assure you that we will continue to improve on that.
“As soon as some of our major projects are in final negotiations when they are concluded, there will be more investments which will continue to drive the economy going forward. We are heading in the right direction.
We will finish the year in the right direction.”
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