03/09/2024
Alternative Government Plans to Tackle PNG's Ballooning Public Debt: The alternative government has announced that one of its top priorities, if it assumes office, will be to reduce Papua New Guinea's public debt, which has surged from K29 billion in 2019 to an estimated K100 billion today. This strategic policy action plan was unveiled yesterday by Sir Puka Temu, chairman of the alternative government working group and Abau MP, after six months of preparation.
“The total public debt has escalated to an estimated K100 billion from K29 billion in 2019, encompassing contingencies, arrears, state-owned enterprise debts, and State guarantees,” Sir Puka stated. He criticized the Marape Government for borrowing nearly K71 billion from domestic and external sources over the past 3.5 years, an average of K20.3 billion per year, which he described as reckless. He further noted that this borrowing spree was facilitated by amending the Fiscal Responsibility Act, raising the debt-to-GDP limit from the acceptable 35 percent to 60 percent.
The policy plan also focuses on restoring confidence in the public and private sectors by addressing key areas such as fiscal discipline, foreign currency shortages, cost of living, economic growth, agriculture revitalization, healthcare enhancement, law and order strengthening, public service accountability and efficiency, and electoral system reform.
Sir Puka emphasized that the GDP debt ratio has surged from 35 percent to 60 percent, accusing the Government of deceiving the public by claiming the amendment was necessary for budget repair. “But let’s be clear: the Government embarked on a massive borrowing spree, followed by reckless spending, with no regard for the dire consequences on our economy and people,” he said. He warned that the current debt-to-GDP ratio, standing at 58 percent, places PNG at serious risk of defaulting on its debt repayments, which could lead to an economic catastrophe.
“In real terms, there has been no economic growth, with the average real GDP growth over the past four years at a dismal 0.5 percent. No economic growth means no increase in tax revenues,” Sir Puka added. He pointed out that the K71 billion borrowed should have resulted in substantial growth, including job and income creation, yet this has not materialized. He questioned the Marape Government’s management of these funds, asking, “Where did James Marape and his Government squander these billions of kina? Where have they invested these funds?”
To address these issues, Sir Puka outlined the alternative government’s plan, which includes:
* Reducing the debt-to-GDP ratio to 35 percent by 2029 through amendments to the Fiscal Responsibility Act;
* Halting the reckless printing of money (quantitative easing);
* Banning further borrowings by state agencies;
* Lowering the Kina Facility Rate; and
* Slashing government spending and the national deficit.
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