While a record 13 billion kina budget has been announced, Papua New Guinea’s debt levels are expected to increase significantly reflecting the government’s move to obtain more loans to boost development spending.
It is projected that by 2014 PNG’s debt will equal more than a third of the country’s gross domestic product and then fall to 25 percent following expected economic growth.
But Treasury has warned that any disruption to both export revenue and commodity prices could put the country’s future at risk.
A large part of that borrowed money is coming from Chinese concessional loans. By 2017, Papua New Guinea will have borrowed K1 billion in concessional loans.
The treasurer, Don Polye, finance Minister, James Marabe and the Planning Minister, Charles Abel, say they’re taking personal responsibility for this budget with its five year expenditure strategy.
The treasurer says the debt levels are projected to drop as Papua New Guinea’s ability to pay back the money increases. In three years, PNG will see its first export of gas and revenue will start flowing from other major projects.
Treasury is also taking a close interest in the economic downturn in Europe and the US which indicate that stabilization and recovery may still be a long way off. A sharp downturn could affect trade and government revenue.
The government is maintaining its “zero tolerance” approach to corruption. The finance minister, James Marabe, says the finance management act is being reviewed and strong punitive actions will be taken against those wasting public money.
If managed well, Papua New Guinea, could end up with an economy worth 60 million kina in seven years, says Planning Minister, Charles Abel.
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