Debt stands at K7b

By ISAAC NICHOLAS

PAPUA New Guinea’s domestic and foreign debt stands and K7 billion and the Department of Treasury is now reviewing the country’s debt management strategy to maintain it at a manageable level, Treasury Minister Don Polye said yesterday.
“It is very important to keep our debt below a certain level of our GDP (Gross Domestic Product) and that is why we are reviewing these,” Mr Polye said.
He said the drawing down of any loan facility, whether the loan is concessional or commercial, must be done within the framework of the government debt management strategy.
“If we bring in loans to develop Papua New Guinea, we have to ensure we do it within that framework so that our debts continue to remain at manageable levels, regardless of the size of the loans or facilities that we bring into the country,” Mr Polye said.
“It is very important to work to review the debt management strategy and also look at the legislation that is in place like the Fiscal Responsibilities Act.’’
Treasurer Polye said the other framework that treasury was working on was the review of the Medium Term Development Strategy and other related Government plans.
“We have to focus on the areas that we have to apply the loan investment funds on. It’s easy to borrow money but the challenge is for us to apply the funds for investments to maximise our investments,” he said.
“There is no point in throwing money out and we don’t achieve the benefits that we want to over time. Every loan or money that we borrow must have a high rate of return on the investments that we make,” Mr Polye said.
“Any investments that we do, like the development of the major highways or PNG Power or telecommunication or even city roads and other roads in the country must be prudently managed by keeping the cost low, managing the outcome and at the same time making sure there is quality.
“We must make sure there is no mismanagement and corruption involved in the execution of these programs and making sure that we achieve the returns at the end.
“ At the end of the day, it is payable with interest and if you throw money down the drain and you do not earn a return on the investment that we make, it will be futile and we do not want to go down that road.
“All the framework, policies and strategies that I have outlined are very important and they are under review. What we are going to do within that framework is that we will draw loan facilities within the strategies outlined.
“The priority is the Okuk (Highlands) Highway, which is over 600 kilometres long and that road as indicated by the studies made, is the single most important asset that PNG has to support the economy. That road was built in the colonial days and it needs to be redesigned and reconstructed.”
Mr Polye said the pavement structure, the drainage systems and road design and construction methods applied in the 1960s, ‘70s and ‘80s can no longer accommodate current traffic and is costing the State and Government so much money on piece-meal work that is mostly sub-standard.
“The most economical way in addressing the Highlands Highway is redesign, re-scope and reconstruction to an international standard asset that will stimulate the growth of PNG’s economy.
“That is the first priority that the O’Neill-Dion Government is embarking on.’’