The Opposition has slammed the Government over the K6 billion Chinese loan deal.
Shadow Minister for Finance and Treasury, and Open Member for Kandrian Gloucester Electorate, Hon. Joseph Lelang stated in a press release that this loan must never be allowed because the Government cannot justify why it is getting the loan.
He stated that 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.
He said this is for the interests of my people and the nation’s interests as Shadow Minister for Treasury and Finance.
“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.
“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 their debt repayment schedule is 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 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.
He said 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.
“This reflects the Government’s little attention to the burden imposed 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.