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PORT MORESBY, Papua New Guinea (February 12, 1999 - PACNEWS/Radio Australia)---The Papua New Guinea government, in an effort to resolve budget problems, will issue bonds worth more than US$ 300 million.

With falling foreign reserves and no sign yet of the loans it needs to fund this year's budget, the Papua New Guinea government has turned to the financial markets.

It will issue five-year Eurobonds in U.S. dollars, hoping to raise much needed revenue and perhaps reduce its dependence on such institutions as the World Bank.

The government considers the issuance of bonds to be a low risk strategy and has hired prominent international bankers and law firms to manage the activity. It hopes the recent assignment of fiscal ratings by international credit agencies will inspire confidence.

The PNG opposition, however, says the issuance of bonds is a bad policy -- one of mortgaging state assets and incurring long term debt to fund short term, recurrent expenditures.

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