PNG Government Funds In Commercial Banks Scrutinized

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Hundreds of millions reportedly held in commercial banks

By Freddy Mou

PORT MORESBY, Papua New Guinea (The National, Nov. 26, 2013) – Papua New Guinea’s Public Accounts Committee has questioned senior civil servants on why public funds held in trust accounts are deposited with commercial banks rather than the central bank.

The committee yesterday grilled the secretaries to the departments of Finance, Treasury and Planning on the matter.

Committee chairman John Hickey told the secretaries that very little accountability and almost no reporting of the use of public funds through the trust accounts had been discussed.

There is K2.3 billion [US$870.6 million] invested in trust accounts in the country. Of that, only 7% (K0.161b [US$60.9 million]) is invested in the central bank, while 93% is kept in commercial banks.

"We (PAC) and the Auditor-General have found enormous misuse of the trust account systems and funds held in these accounts," Hickey said.

"In 2012, this committee wrote to every department and provincial governments which maintained a trust account.

"We sought copies of all trust accounts, instruments and reports under the Public Finance (Management) Act and the financial instructions.

"Of 20 departments, only seven replied and out of 21 provincial governments, only two replied.

"How do you propose to enforce accounting requirements for trust accounts when the agencies refuse to answer to anyone, including the National Parliament?"

Finance Secretary Dr Ken Ngangan told the committee that the Finance Department had reduced the trust accounts from 100 to 30.

"I am new to the position but will try my best to rectify the problem and work with my colleagues to tackle the problem," he said.

He said the problem was an ongoing one where trust accounts were sometimes stopped to allow investigation into the funds which he said needed a corporative body to resolve.

The committee asked Ngangan if it was possible to transfer the trust accounts from commercial banks to the Bank of Papua New Guinea where they could gain more interest than in the commercial banks.

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