IMF BOARD APPROVES K1.2b FOR PAPUA NEW GUINEA

NBC News PNG | 10 June 2020 —————————————– The Government has secured a K1.2b soft loan from the International Monetary Fund. The IMF board approved the soft loan last Friday in what Prime Minister James Marape describes as a landmark achievement and a strong vote of confidence in the Marape-Steven government and PNG’s economy from the international community. In a statement Tuesday night, Prime Minister Marape says the soft loan was secured on unprecedented terms and will go straight into the Bank of Papua New Guinea with direct foreign exchange benefits for the private sector. Mr Marape says the loan was secured on unprecedented terms of 0.0% interest rate over 10 years with a 5.5 year grace period and the first principal repayments will start in December 2025. He says like the Australian bridge financing in 2019, the loan will go straight into the Bank of Papua New Guinea with direct foreign exchange benefits for the private sector. “I want to assure the people of this country that this loan will be put to good use in supporting our proven policy based programs,” said Prime Minister Marape. “These include support for our COVID-19 response, Connect PNG, Special Economic Zones to promote exports, HELP program, Agriculture and MSME policy, State-Owned Enterprises reforms, and Public Sector reforms.” “This loan forms the core of the 2020 budget and is within our five-year fiscal consolidation strategy that aims to bring debt-to-GDP ratio to below 40 per cent in 2024 in order to restore commitment to the limits set out in the Fiscal Responsibility Act,” said Mr Marape. The Prime Minister made it clear that the current support of the IMF reinforces his Government’s home-grown policy based programs and reforms. He says this is unlike the previous IMF program of the 1990s characterized by strict trade and capital markets liberalization and currency devaluation policy conditions. “This new lending program for PNG is part of a reconfigured relationship between the IMF and Papua New Guinea. The earlier work under the Staff Monitored Program established a track record to allow access to the new emergency funding. The IMF and the international community will continue playing a key supporting role as partners in PNG’s own growth and development reform program.” Prime Minister Marape is delighted that Treasurer Ian Ling-Stuckey and his dedicated team had worked closely with the IMF over many months to secure this landmark financing agreement. “I want to congratulate Treasurer Ian Ling-Stuckey for working tirelessly to repair the country’s budget. He has put a stop to reckless borrowings for poorly conceived capital projects that mostly benefited foreign firms and SOEs.” “He has stopped expensive commercial borrowings where the financial benefits flowed to foreign bankers. He has instead delivered a major reform agenda that has reshaped our debt management strategy to focus on securing good, cheap, transparent financing from the international community and our priority strategic partners such as Australia.” Mr Marape also thanked the IMF Board for recognizing his government’s sincerity and transparency in setting a new direction for the economy. “We are a more open, transparent and accountable government working to reduce corruption. We are working diligently to adjust from recurrent expenditure towards increased investment in growth through the capital budget while focusing on improving efficiencies and productivity for export growth,” said Prime Minister Marape. NBC News Ends// —————————————-