Opposition challenges PM to tell the truth on the use of the K6 billion loan

Opposition Media

The Opposition has challenged the Prime Minister to reveal the true intent of the K6.0 billion Chinese EXIM Bank loan and to stop issuing ambiguous statements to justify the Government’s actions.

Shadow minister for Finance and Treasury, Mr Joseph Lelang said in a press release that the K6 billion loan would be the single largest loan to be sourced by any government since independence.
Mr Lelang said it was therefore necessary for the Prime Minister to state clearly the terms and conditions of this loan, particularly its the management and disbursement. He also asked whether the Department of Treasury would manage this loan through established budgetary processes.
“The Opposition is not convinced that the K6 billion external loan is good for PNG at this point in time. The O’ Neill Government’s economic policy of “high growth rates and more large loans” is bad for PNG and will only lead to economic and social disaster.
“The K6.0 billion loan is equivalent to 70% of the country’s total internal revenue and will increase PNG’s total public debt from K8.6 billion to K14.6 billion’, Mr Lelang said.
He stated that failure to address the 2012 budget deficit of K500 million will result in the country’s public debt being unsustainable by international standards.
Mr Lelang said that the Opposition is calling on the Government to stabilize the PNG economy and its budgetary management in light of a global economic downturn which saw revenues from extractive industries such as mining and petroleum being affected.
This has also affected the agriculture industry; with companies such NBPOL reporting decreases in unaudited pre-tax profits.
Mr Lelang also highlighted that the increased inflation is disadvantageous for ordinary Papua New Guineans. He said that the cost of school fees in 2013 is likely to rise by 11.2%, doubling the K300 million cost of free education in 2012.
He acknowledged that the period of unprecedented growth in the PNG economy was attributable to favorable commodity prices, and to tight fiscal discipline by previous governments.
“The deliberate policy of the Somare Government in reducing external debt from windfall tax is a plus to his regime and is consistent with the Fiscal Responsibility Act (2006)”, he said.
Mr Lelang said that the K6.0 billion loan cannot be justified on PNG’s high growth rate as this has not translated into improvements to living standards, nor is it guaranteed to be sustainable.
“We believe that the K6 billion loan is not good for PNG especially at this time and given the current economic conditions. There are still many questions surrounding the K6 billion loan that the Prime Minister is silent on”, Mr Lelang said.