PRESS STATEMENT
“OPPOSITION SLAMS GOVERNMENT OVER K 6 BILLION LOAN CONTROVERSY”
The Opposition has slammed the Government over the K6 billion Chinese loan deal. This loan must never be allowed because the Government cannot justify why it is getting the loan. This is all wrong.
I take excerption to the comments by Anderson Agiru, wh
ich
appeared on Friday’s National. If Agiru does not understand what I am
saying then he should shut up and go run his province. I am a Legislator
and Open Member for Kandrian Gloucester Electorate. I am not the
Secretary for National Planning. I represent the interests of my people
and the nation’s interests as Shadow Minister for Treasury and Finance.
Royalties and dividends from the Gas Project will come when gas is first exported in 2014 but taxes to the Government will come in 10 years from now. It s the taxes from this Project that is now pre- committed by this Government. But between now and 2022, the current PNG workforce who are the taxpayers and those now studying at universities and high schools and including those not born yet, will have to shoulder the burden of repaying this loan.
That is why it is in their interest that they must know why Prime Minister O’ Neill went to China and borrowed K6 billion without a plausible reason. What is obvious is that the Government failed to fully scope and designed a public investment projects before they went out and secured the loan. Now that they are back from China, they are now scrambling around trying to look for projects to fund.
Is this the action of a responsible government?
Under the Fiscal Responsibility Act (2006), it is a legal requirement that any borrowing by the Government has to be fully repaid by the end of its term in Office meaning by 2017. In other words, the K6 billion loan from China must be repaid within 5 years by 2017. The Prime Minister has to explain to the nation what is their debt repayment schedule over 5 years in accordance with the law? Where will they get the money from to repay this K6 billion loan over five years given that gas money is coming after 10 years from now?
The Opposition is saying that given domestic economic conditions, the K6 billion loan will do more harm than good. The Government does not need to borrow the K6 billion, it can pursue other options.
The Opposition is very concerned over many decisions taken by this Government since it took Office because they are not in the best interest of the nation. The Government’s attempt to justify many of their actions is not convincing. The price that the country will pay for the K6 billion loan in terms of interests payment and amortization and the risk exposure to the PNG economy is real and will far outweigh the benefits (if any) that will accrue to this country.
Five years from now, the country will continue to remain the same and many of us will wonder where the K6 billion went to. But what is real is that the tax- payers of this country will pay for this loan and their children will repay this loan for the next 100 years including those that will not benefit from this K6 billion loan. Is this crying wolf?
It is the view of the Opposition that the Government has rushed into the K6 billion loan without a plan and yet we have already pre-committed the future gas revenue of this country. This is simply bad governance and is reflective of a Government that is irresponsible and pays little attention to the burden we are imposing on the taxpayers and future generations of this country. We have successfully reduced total external debt from around K4 billion over the last 10 years since 2002 to K2.6 billion now in 2012. The K6 billion loan will take more than 60 years to repay and bring total external loan to K8.6 billion.
The Opposition is not against borrowing but we must be very clear and explore all options as a responsible government before taking such drastic decisions especially when we are talking about K6 billion loan. It is not clear why the K6 billion loan was secured. It is not clear what the terms, conditions and structure of the loan is and what the loan is to be used for. The details are sketchy. Why is the Government unable to come out clear on their actions instead of calling names and side- tracking the issue? Have they got something to hide?
Royalties and dividends from the Gas Project will come when gas is first exported in 2014 but taxes to the Government will come in 10 years from now. It s the taxes from this Project that is now pre- committed by this Government. But between now and 2022, the current PNG workforce who are the taxpayers and those now studying at universities and high schools and including those not born yet, will have to shoulder the burden of repaying this loan.
That is why it is in their interest that they must know why Prime Minister O’ Neill went to China and borrowed K6 billion without a plausible reason. What is obvious is that the Government failed to fully scope and designed a public investment projects before they went out and secured the loan. Now that they are back from China, they are now scrambling around trying to look for projects to fund.
Is this the action of a responsible government?
Under the Fiscal Responsibility Act (2006), it is a legal requirement that any borrowing by the Government has to be fully repaid by the end of its term in Office meaning by 2017. In other words, the K6 billion loan from China must be repaid within 5 years by 2017. The Prime Minister has to explain to the nation what is their debt repayment schedule over 5 years in accordance with the law? Where will they get the money from to repay this K6 billion loan over five years given that gas money is coming after 10 years from now?
The Opposition is saying that given domestic economic conditions, the K6 billion loan will do more harm than good. The Government does not need to borrow the K6 billion, it can pursue other options.
The Opposition is very concerned over many decisions taken by this Government since it took Office because they are not in the best interest of the nation. The Government’s attempt to justify many of their actions is not convincing. The price that the country will pay for the K6 billion loan in terms of interests payment and amortization and the risk exposure to the PNG economy is real and will far outweigh the benefits (if any) that will accrue to this country.
Five years from now, the country will continue to remain the same and many of us will wonder where the K6 billion went to. But what is real is that the tax- payers of this country will pay for this loan and their children will repay this loan for the next 100 years including those that will not benefit from this K6 billion loan. Is this crying wolf?
It is the view of the Opposition that the Government has rushed into the K6 billion loan without a plan and yet we have already pre-committed the future gas revenue of this country. This is simply bad governance and is reflective of a Government that is irresponsible and pays little attention to the burden we are imposing on the taxpayers and future generations of this country. We have successfully reduced total external debt from around K4 billion over the last 10 years since 2002 to K2.6 billion now in 2012. The K6 billion loan will take more than 60 years to repay and bring total external loan to K8.6 billion.
The Opposition is not against borrowing but we must be very clear and explore all options as a responsible government before taking such drastic decisions especially when we are talking about K6 billion loan. It is not clear why the K6 billion loan was secured. It is not clear what the terms, conditions and structure of the loan is and what the loan is to be used for. The details are sketchy. Why is the Government unable to come out clear on their actions instead of calling names and side- tracking the issue? Have they got something to hide?
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