PNG FINANCIAL SITUATION IMPROVING

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PORT MORESBY, Papua New Guinea (The National, August 7) – Papua New Guinea’s debt position has improved significantly since 2003, but the Government is not about to rest on its laurels.

Aloysius Hamou, Treasury Department’s first assistant secretary, said at the 2006 Money Show at Holiday Inn last Friday the Government was working with investors and stakeholders to identify the feasible improvements, including publishing information on Treasury and Central Bank websites.

He said publishing fiscal information complied with the International Monetary Fund’s data dissemination standards on the scope, frequency, timeliness of information on the Government’s debt, and evaluating the feasibility of listing the Government Securities on the local exchange.

Mr Hamou said Government would form a project team and project steering committee to help Treasury carry out these improvements.

He said there was also consensus amongst investors and stakeholders about important but lower priority improvements to the Government bond market including developing a comprehensive market for bonds, establishing a debt management statutory authority to improve accountability and responsiveness of officials issuing bonds and bills and establishing a market for State Owned Enterprise (SOE) Bonds.

He said restructuring of the Government’s debt since 2004 had been achieved by reducing the reliance on foreign-currency debt and increasing the reliance on kina-denominated debt, because foreign-currency debt is "very volatile and risky".

Good progress had been made in reducing foreign-currency debt from PGK4.9 billion [US$1.7 billion] at the end of 2003 to a projected PGK3.9 billion [US$1.37 billion] by the end of this year, and increasing kina-denominated debt from PGK3 billion [US$1 billion] at the end of 2003 to a projected K3.7 billion [US$1.31 billion] at the end of this year.

Good progress had also been made by reducing Treasury Bills from PGK2.8 billion [US$ 987 million]at the end of 2003 to a projected PGK1.8 billion [US$634 million] at the end of this year and increasing inscribed stocks from PGK0.2 billion [US$71 million] at the end of 2003 to a projected K1.9 billion [US$670 million] at the end of this year.

Government debt had been successfully reduced, where total (gross) Government debt had declined from 62% of Gross Domestic Product (GDP) at the end of 2003 and was projected to be 48% of GDP at the end of this year.

Net Government debt (gross debt minus reserves) declined from about 50% of GDP at the end of 2003 and was projected to be about 33% of GDP at the end of this year.

Mr Hamou said this reduction of debt to more sustainable levels was made possible by the strength of the kina and sound monetary and fiscal Policy.

August 8, 2006

The National: www.thenational.com.pg/

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