PORT MORESBY, Papua New Guinea (PNG Post-Courier, Dec. 2) – The Papua New Guinea government says it will terminate loan arrangements with its overseas donor partners by March 2004 if funds promised to support the country’s newly-announced budget are not released.

Prime Minister Sir Michael Somare told Parliament this yesterday making specific reference to the Asian Development Bank and the World Bank in his Budget speech.

Sir Michael said the 2004 Budget made provisions for an offshore loan of US$50 million to close the financing gap.

"Having scored some points on the drawing board with respect to the improvements to the economy in the past 12 months, we will be going out to the international financial market again to borrow.

"This is part of the Government’s strategy to get PNG out of the doldrums of depending on a few development partners and to be more in-dependant," Sir Michael said. 

But he told Parliament: "It is important that I mention the adversities that this government had to confront and overcome to still achieve the results that we have managed to achieve to date.

"The Asian Development Bank has not delivered the promised loan of US$35 million despite the fact that we have met all the requirements to draw-down the funds.

"The World Bank has shied away from negotiating their promised loan on concessional terms to rehabilitate the Highlands Highway, even though the Government had made significant progress in implementing the Forestry Conservation Project.

"The time has also come for us to seriously consider the future of any outstanding loan commitments by our traditional development partners.

"Since December 2002, we have been waiting for these partners to honour their commitments whilst meeting all the requirements of the draw-downs.

"We have shown our resilience and indeed fiscal discipline in managing our expenditure levels without these promised loan funds."

Sir Michael told the House: " By the first quarter of 2004, if these partners do not deliver we will have to terminate the arrangements." 

He added: "We have proven our resilience over the last 15 months and are confident that with the continued strict fiscal discipline and spending in growth areas our economy will continue to grow. I am confident of finding alternative means of raising an extra US$50 million to close the financing gap. We have mapped out and stabilized the path to recovery in the past 15 months. The economic indicators are showing signs of improvement. We should now strengthen this position with a more positive and confident approach to achieve further positive results in both the economic and social sectors."

December 2, 2003

Papua New Guinea Post-Courier:


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