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Port Moresby
December 5, 2021
Business News

Government SME Loan Policy Likely to be Affected


By Quinton Alomp – EM TV News, Port Moresby

Inadequate government funding to the National Development Bank (NDB) is likely to cause disruptions with the rollout of the Small to Medium Enterprise (SME) loans.

The lack of funding has resulted in NDB using its internally generated cash of K38 million to fund the SME loans.

NDB announced today that 498 approved loans valued at over K53 million will not be funded.

Managing Director, Moses Liu, said this is due to a shortfall of K160 million yet to be paid by the government.

Also the K50 million appropriated in the 2015 National Budget is still pending.

“If the government does not provide adequate funding to NDB to implement the SME Stimulus Package then the board and management of NDB will be forced to review the lending rate in a view to reverting back to the previous lending regime to sustain the operations of the Bank,” the managing director announced.

This has drawn uncertainty for the future of the proposed SME Policy to be implemented by NDB.

At the end of 2012, the government launched its SME Stimulus Package. Then on January 01st 2013, NDB reduced its lending interest rate to 6.5 per cent to drive growth in the local SME sector.

Under this arrangement, the government was supposed to provide K100 million annually. However, since 2013, only K140 million was given. An outstanding balance of K160 million is yet to be paid.

Lack of adequate funding has put a strain on the rollout of important projects, particularly the Stret Pasin Incubation Program and the People’s Micro Bank operations.

Mr Liu is calling on the government to immediately release the K50 million appropriated in the 2015 National Budget to ease the situation.

He said customers will not be affected this year. However, if funding is not forthcoming, changes will be expected in the near future.

The SME sector has made up 10 per cent of PNG’s economy, according to Mr Liu.  

https://youtube.com/watch?v=JysmiiKuID4%3Ffeature%3Doembed%26wmode%3Dopaque%26showinfo%3D0%26showsearch%3D0%26rel%3D0

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