Australia denies new $440m loan to PNG is related to countering China influence
Australia's decision to give Papua New Guinea a $440 million(US$300 million) loan is "completely unrelated" to the Federal Government's desire to curb China's influence in the Pacific, according to Finance Minister Mathias Cormann.
PNG has been seeking urgent financial support to prop up its budget, courting on both Australia and China in recent months for new loans and grants.
Over the weekend, Canberra quietly announced it had taken the unusual step of giving PNG a loan to help it cover day-to-day expenses and pursue economic reforms.
Senator Cormann denied the arrangement was designed to ensure PNG didn't accept a loan from China instead, saying it was “completely unrelated”.
“We have a longstanding relationship with Papua New Guinea. It's in our national interest for Papua New Guinea to have a stable fiscal system and fiscal outlook,” he said.
“We're providing a loan which will help Papua New Guinea through some transitional issues, as they are pursuing economic and fiscal reforms that will help put them on a stronger and more sustainable fiscal and economic trajectory for the future.”
After taking over as PNG Prime Minister in May,James Marape sought help from Australia to deal with its national debt burden of 27 billion kina (AUD$11.8 billion), which represents more than one-third of the nation's GDP.
Then in August,Marape reached out to China for help to refinance its loans, but then it quickly backtracked.
Now, after months of negotiations, Australia has agreed to loan $440 million (US$300 million) of funding directly to Port Moresby, to be paid back with a 2.5 per cent interest rate.
“This is about dealing with a unique financial circumstance that PNG presented to us,” Trade Minister Simon Birmingham said.
“[It] brings in the International Monetary Fund to ensure it's an appropriate global standard solution.”
PNG is yet to release its budget for the forthcoming year, but Marape believes the loan demonstrates Australia's endorsement of his plans for the country's future.
“The funding is the first significant concessional loan Australia has offered in many years to anyone in the world,” Marape said in a statement.
“This reflects the confidence Australia has in the extensive and comprehensive reform programme undertaken by the Marape-Steven government.”
Australia already provides more than $500 million(US$338 million) a year in aid to PNG, which funds specific projects under close monitoring.
The $440 million (US$300 million) loan will be used at the Marape Government's discretion, something Australia has not permitted in nearly two decades given PNG's history of chronic corruption.
The loan will come from Export Finance Australia, the export credit agency that usually provides loans to Australian businesses pursuing new export market, not providing loans to other countries.
The arrangement means there will be no new money needed from Australia's budget, which helps the Coalition reach its aim of returning to surplus this financial year.
“We are pleased that we're able to help a friend and neighbour in a way that is not going to impose a cost on Australian taxpayers,” Senator Cormann said.
SOURCE: ABC/PACNEWS
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PNG has been seeking urgent financial support to prop up its budget, courting on both Australia and China in recent months for new loans and grants.
Over the weekend, Canberra quietly announced it had taken the unusual step of giving PNG a loan to help it cover day-to-day expenses and pursue economic reforms.
Senator Cormann denied the arrangement was designed to ensure PNG didn't accept a loan from China instead, saying it was “completely unrelated”.
“We have a longstanding relationship with Papua New Guinea. It's in our national interest for Papua New Guinea to have a stable fiscal system and fiscal outlook,” he said.
“We're providing a loan which will help Papua New Guinea through some transitional issues, as they are pursuing economic and fiscal reforms that will help put them on a stronger and more sustainable fiscal and economic trajectory for the future.”
After taking over as PNG Prime Minister in May,James Marape sought help from Australia to deal with its national debt burden of 27 billion kina (AUD$11.8 billion), which represents more than one-third of the nation's GDP.
Then in August,Marape reached out to China for help to refinance its loans, but then it quickly backtracked.
Now, after months of negotiations, Australia has agreed to loan $440 million (US$300 million) of funding directly to Port Moresby, to be paid back with a 2.5 per cent interest rate.
“This is about dealing with a unique financial circumstance that PNG presented to us,” Trade Minister Simon Birmingham said.
“[It] brings in the International Monetary Fund to ensure it's an appropriate global standard solution.”
PNG is yet to release its budget for the forthcoming year, but Marape believes the loan demonstrates Australia's endorsement of his plans for the country's future.
“The funding is the first significant concessional loan Australia has offered in many years to anyone in the world,” Marape said in a statement.
“This reflects the confidence Australia has in the extensive and comprehensive reform programme undertaken by the Marape-Steven government.”
Australia already provides more than $500 million(US$338 million) a year in aid to PNG, which funds specific projects under close monitoring.
The $440 million (US$300 million) loan will be used at the Marape Government's discretion, something Australia has not permitted in nearly two decades given PNG's history of chronic corruption.
The loan will come from Export Finance Australia, the export credit agency that usually provides loans to Australian businesses pursuing new export market, not providing loans to other countries.
The arrangement means there will be no new money needed from Australia's budget, which helps the Coalition reach its aim of returning to surplus this financial year.
“We are pleased that we're able to help a friend and neighbour in a way that is not going to impose a cost on Australian taxpayers,” Senator Cormann said.
SOURCE: ABC/PACNEWS
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