Papua New Guinea's government defends a loan from the Exim Bank of China | Pacific Beat

Papua New Guinea's government defends a loan from the Exim Bank of China

Papua New Guinea's government defends a loan from the Exim Bank of China

Updated 1 October 2012, 10:08 AEST

Papua New Guinea's government has defended a proposed A$ 3 billion  loan from the Exim Bank of China as ''a soft loan'' that will be easy to repay.

It says the loan being negotiated will be used to rebuild the country's deteriorating roads and other infrastructure.

Chinese Exim Bank and PNG government officials are finalising the details of the loan.

Presenter: Firmin Nanol

Speaker: PNG's Works Minister Francis Awesa, Opposition spokesperson for Treasury and Finance, Joseph Lelang

NANOL: PNG's Prime Minister Peter O'Neill says the A$ 3 billion loan is a good loan. He says it will be used to rebuild the country's economic life line-the deteriorating Highlands Highway, which connects the coastal port of Lae and the heavily populated Highlands region, plus other important infrastructure like wharves, jetties and the roads. The Treasurer, Don Polye also told reporters, the loan will be managed prudently to fund PNG's development needs and priorities. Mr Polye says it should not add pressure to the government's national debt, which now stands at more than A$ 3 billion if managed properly within the government's national budget framework. PNG's Opposition spokesperson for Treasury and Finance, Joseph Lelang says the loan will make PNG go bankrupt. The first term MP for the Kandrian-Gloucester electorate, and a former Planning Secretary, accused the government, Prime Minister Peter O'Neill and his senior economic ministers of over borrowing, thus adding more pressure to the national debt level without knowing what those monies will be used for.

LELANG: Six billion kina alone is a lot of money. What are the terms, the structure and the conditions of the loan? That we need to know. Who is going to manage this loan and repay this loan? Will this loan be managed by the Department of Treasury through the normal budget process? These are the issues that the Prime Minister must come clear on. This six billion kina loan is not good for PNG at this point in time, because the economic conditions are not right at the moment. The financing of high growth rates with high, large and frequent loans is bad for Papua New Guinea. The six billion kina loan is going to increase the current stock of public debt from 8.6 billion kina, to 14.6 billion kina.

NANOL: PNG's Works Minister Francis Awesa says Joseph Lelang is misleading the country and the people. He says the three billion dollars loan once approved and monies actually released, will be put to good use to upgrade the deteriorating highlands highway plus other infrastructure.

AWESA: The loan is earmarked for four lane Lae city to Nasap, four lane, total rehabilitation of Lae city roads, island highway from Lae to Porgera and Copiapo in the Enga Province and eventually connect up with the Highlands that way. We are opening up the country. Listeners, I want to say infrastructure is the cataylst for development and any country that's worthy of its name, first thing they do is build up infrastructure, left, right, centre, everywhere. Australia's done it, America's done it, Japan has done, China has done it and they're doing to. You open up the country, and people will use the initiative to go into business to enable people to infrastructure, air straits, jetties, airports, seaports, roads, that's what I'm talking about. The country will move.

NANOL: He says the country will not go bankrupt has claimed by the Joseph Lelang, and says the loan can be easily repaid by the PNG government.

AWESA: Why this government under Peter O'Neill knows that is because the foundation members of the LNG project is one of the biggest Chinese companies and from there own assessment, when they decided to take up the shares in our LNG project, they know how much money will be available to themselves, to other investors and to Papua New Guinea. Then six billion is peanuts compared to what the money we can earn from our LNG project. And don't forget, that other resources will come into production as well and in this regard, I'm referring to the working mine, Hidden Valley. They come into production in 2017, so we're not going broke as the Homnourable minister like us to think,

NANOL: The Works Minister, Francis Awesa says he will be leading a government delegation to China in October this year to finalise the loan.

He says it's being negotiated, but the actual funds will be available after six months from the date the loan has been signed off by both governments and the Exim Bank of China.

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