The True State of Papua New Guinea ’s Budget – Public Debt illegally at 41.3% of GDP. This is money that your family household and your children will eventually have to pay in tax money or other ways of raising money from the land and beauty that belongs to the people of Papua New Guinea. The legacy of the former Prime Minister, Peter O’Neill left for the people of PNG.
MINISTER FOR TREASURY
PO Parliament House
Waigani.NCD
m: +675 71111777
by Dilu Dee Okuk
The True State of Papua New Guinea ’s Budget – Public Debt illegally at 41.3% of GDP.
“Yesterday, I released the fact that Papua New Guinea ’s budget deficit had climbed to K4,636 million – the legacy of the former Prime Minister, Peter O’Neill. Budget deficits add to public debt. This means the O’Neill regime’s policies were going to add another K4,636 million to public debt in 2019.
PNG’s public debt was therefore going to increase to an extraordinary K33,045 million. With a population of 9 million people, this means that the O’Neill years were going to leave every single person in Papua New Guinea with a public debt burden of K3,672.
If there are six people in your household, this means that the O’Neill regime debt level for your household is K22,028.
This is money that your family household and your children will eventually have to pay in tax money or other ways of raising money from the land and beauty that belongs to the people of Papua New Guinea.
“How big was the public debt burden on every family back in 2011, before the start of the O’Neill years? Papua New Guinea ’s total public debt in 2011 was K7,203 million. Dividing this by our population at the time of 7 million gives a debt figure of K1,029 per person.
With six people in the household, this would have been a public debt figure of K6,174. So under the O’Neill regime years, a household of six had their national public debt liability increase by K15,854 – up from K6,174 to K22,028.
Over the O’Neill years, the debt level for every single person in the country increased by 356%. This is the O’Neill legacy left for our children.
“At K33,045 million, the public debt figure is by far the biggest in Papua New Guinea ’s history when measured in Kina terms (current prices). Expressed as a share of GDP, it has reached 41.3%. Under the Fiscal Responsibility Act, the legal limit was 35%. Clearly, the former Prime Minister has left an illegal debt legacy.
“Why is the debt to GDP level now so high? There are four main reasons. First and most importantly, this illegal debt level is the direct result of the massive and irresponsible budget deficits of the eight years of the O’Neill regime. Budget deficits need to be funded which means more debt.
This explains almost all of the increase in public debt levels. Second, he allowed a culture of special deals which have seen many unwise “investments” that were clearly non-commercial.
Some of the chickens have come home to roost. With the state now paying interest and other costs on various state guaranteed deals, under our own laws they should have been included in our public debt figures.
This includes the K800 million state backed deal on the Motokea port (of which the state is now paying interest on a K600 million share), the extraordinary agreement to provide a state guarantee for roads in NCD but not in the rest of the country (K201 million still outstanding) and K375 million paid up front for the deep sea mining Solwara fiasco before exhausting avenues to protect PNG’s interests.
There are many other deals which are still hidden in various State Owned Enterprise accounts. However, a lack of transparency nurtured by the O’Neill years means that we still do not know the full extent of SOE debt. Many people consider all SOE debt should be included in the gross public debt figure.
The IMF includes all state-guaranteed debt in its debt sustainability analysis. More work will be done on determining how much SOE debt should be added to our public debt measurement.
Third, debt numbers have excluded the reality that Papua New Guinea ’s exchange rate has depreciated since many of the debt-based loans have been taken out. Good international practice, and the practice required of the private sector, is to include valuations of debt based on current foreign exchange values.
Interest costs and principal repayments are based on exchange rates at the time of payment – so should the measurement of that debt. Finally, the debt to GDP ratio also depends on the measured size of GDP.
The PNG Treasury has refused to follow international practice of using the most recent numbers from the National Statistics Office as the base. The Papua New Guinea Treasury used a GDP estimate in 2019 of K88.48 billion in its MYEFO.
Using the actual most recent base from PNG ’s own National Statistics Office and independent estimates of Papua New Guinea ’s growth rate and deflators since 2016, the IMF has estimated the actual 2019 GDP is K80.1 billion.
Papua New Guinea will work with others to get better and more updated figures of GDP. Until then the IMF estimate is the most credible figure available and even under the original Treasury estimate, there was still a clear breach of the FRA.
“Now in addition to creating this extra-ordinary blow-out in public debt, the former Prime Minister now has the hypocrisy to start attacking my actions in seeking financing support to deal with the deep economic hole he has dug for this country.
He claims “A smart and strategic government should only borrow for the investment in infrastructure that delivers returns for the economy”. So a quick fact check. Of the K33,045 million in public debt, almost all of it run up by the O’Neill regime, how much has actually gone for infrastructure loans?
This is generously measured by adding the K6,389 million in concessional loans owed to the ADB, World Bank, EXIM and JICA primarily for infrastructure assistance, K600 million for transferring the Motu-Kea port and K201 million for NCD roads – a grand total of K7,190.
This is only 21.7 per cent of the stock of public debt. Less than one-quarter of the public debts racked up in recent years meet the former Prime Minister’s own tests of sensible loans.
So over three-quarters of the O’Neill regime debt is a massive fail even using his own definitions! I will explain in a future release this week the correct approach for meeting the financing challenge left by the economic mismanagement of recent years.
“With the true budget deficit and debt facts now established, I will start explaining the Marape-Steven government’s solutions in preparation for a tough Supplementary Budget on 8-10 October” stated the Treasurer, Ian Ling-Stuckey.
Hon. Ian Ling-Stuckey, CMG. MP
Minister for Treasury
1 October 2019
Ends/
![Below is a wakeup call to the Government of Papua New Guinea by Mr. Hans Barok about the future of engineering in Papua New Guinea. Hans graduated with degree in Bachelor of Electrical Engineering majoring in Communications Engineering from Papua New Guinea University of Technology. He is working with Goodman Fielders Wilmar 11 mile Project Site, working on various tasks and roles as a: Logistician, Electrician, Forklift Operator, technician and Site Electrical Engineer. FUTURE OF ENGINEERING IN PAPUA NEW GUINEA by Hans Barok - Graduate Site Electrical Engineer at Goodman Fielders Wilmar. Hans Barok - Graduate Site Electrical Engineer at Goodman Fielders Wilmar. FUTURE OF ENGINEERING IN PNG Our government and our people invest little to none in our engineers (or engineering). Yet they can mockingly say, "when will PNG manufacture cars or plane? When will PNG engineers design a smartphone or robot etc...?" The real question here is, "have you people invest in engineering?" PLEASE ALLOW ME TO EXPLAIN THE SITUATION AT HAND In order to build a car(or robot or powerplant or smartphone etc...), our engineers at the University level needs: *Engineering and Scientific Research Labs for research in new engineering materials/tools for design & innovation. Have our government or people invest in these? If you have not contribute anything noken pairap faul. *Our country needs Papua New Guinea Engineering Standards (i.e. not a adopted Australian, US, Britain or German standards). Have our government or people help IEPNG (Institute of Engineers Papua New Guinea) or any engineering body in Papua New Guinea for that matter? If you have not contribute anything noken pairap faul!!! *The engineering students need Professional Engineering Design software (ETAP, Sold works, etc...) which cost around in the range of K10,000 to K70,000 (or even more). Can a university student afford such prices? Even we as an Institution, government or people can't afford that for our students, then what more do we expect from them? Do you plant peanut and expect it to bear coconut? *The engineering students need the government or people to provide them exposure to real-world projects with funding. Have these been done often? IF WE DON'T CONTRIBUTE WE MUST NOT BLAH BLAH HERE AND THERE. TIME FOR LESS TALK, MORE ACTION. WHATEVER THE SITUATION NOW, I HAVE THE ULTIMATE FATE THAT ONE DAY IT ALL SHALL COME TO PASS. Read more news and stories here. Watch online news and documentaries about Papua New Guinea here. [email-subscribers-form id="2"]](https://papuaniugini.org/wp-content/uploads/2022/06/a7fdf92bc0d6310cbf1b23889f4290e21654916955-1024x684.jpg)
