MINISTER FOR TREASURY P O Parliament House Waigani.NCD Papua New Guinea m: +675 71111777 Post by PNG Political Limelights

Re-Building Confidence in the Papua New Guinea Economy

“Confidence is a critical part of economic health. Confidence from local businesses to invest, confidence from international businesses to share their knowledge and finance, confidence from international organisations to assist PNG’s development. A key part of my recent trip to the United States and Philippines was building confidence in PNG by assuring international organisations that PNG is an excellent place to invest. Indeed, after years of economic mismanagement, I assured international organisations and businesses that there would be even better business opportunities. The years of deals with O’Neill cronies and special tax favours are over. Instead, sensible economic policies by the Marape-Stevens government, will provide the environment for good investments which will also bring good returns to the people of Papua New Guinea” stated Treasurer Ian Ling-Stuckey. ”An example of my work in building confidence in Papua New Guinea was a visit to the Moody’s credit rating agency in New York. Credit rating agencies provide an important role in the global economy in helping inform investors about risk levels in different countries and businesses. Frankly, PNG does not do particularly well. Since Moody’s started its rating of the Papua New Guinea economy during the Asian Financial Crisis in 1998, Moody’s ranked the PNG economy as “B1”. If you get a “B” at school, it is not a bad mark. But in international finance ratings, B1 means that your economy ranks as “non-investment grade”. Indeed, it is rated as a “highly speculative” investment. This explains why the PNG Sovereign Bond interest rate was so expensive. There was hope that the PNG LNG project would improve PNG’s rating. Instead, under the failed economic policies of O’Neill, the PNG economy was actually down-graded to “B2” in April 2016, and it currently remains at that level. “My work in revealing the true state of the PNG economy, with a budget deficit that was heading to K4.6 billion under O’Neill’s failing policies and a debt to GDP ratio that broke our own laws, entailed a risk. O’Neill’s deep economic hole dug over the last eight years risked a further credit downgrade. This may still happen as it will take many years to fix the underlying problems. My approach has been to be transparent, accept the risk of people actually seeing the economic mismanagement, and respond by providing explanations and setting out sensible future directions. So in our discussions with Moody’s and on behalf of the Marape-Stevens government, I emphasized the importance of a philosophy of being transparent rather than being in denial. I discussed how Papua New Guinea believed it was a country with an important and growing role in the international economy, and so it should adopt international standards on key areas such as measuring debt and size of the economy. I discussed how the Marape-Steven government was one that was willing to make the tough decisions to get PNG back on a sensible development path. This was clearly evidenced by the major K1,480 million of expenditure cuts included in the recent Supplementary Budget. I discussed how more tough choices will have to be made to get the economic fundamentals right again. So along with increased transparency, we also need to share information to build confidence. The Marape-Steven government, with myself as Treasurer, will continue taking the necessary steps to get out of O’Neill’s deep economic hole as well as carefully explaining our actions and way forward to re-build confidence in the Papua New Guinea economy. Peter O’Niell needs to stop talking down PNG’s economy, lurking in the background, colluding to overthrow our government and simply accept that there has been a changing of the guards and James Marape is now the new Prime Minister. The change in Prime Minister is a vital and positive one for PNG and the future of its children” stated Treasurer Ling-Stuckey. Hon.Ian Ling-Stuckey,CMG.MP Minister for Treasury 28 October 2019