Live within means: O’Neill

IALIBU-Pangia MP Peter O’Neill has warned the Government to “live within our means” after reports from two international institutions revealed that the economy is slowing down.
“I remain deeply concerned that we are in a very difficult economic position and the Government needs to urgently go back to basics and live within our means,” he said.
“We have a wonderful country capable of strong development, but we need careful, not careless, economic management.”
The economic updates from the International Monetary Fund (IMF) and the World Bank on Papua New Guinea stated that economic growth was expected to slow to 3.7 per cent this year.
Due to lower global demand and supply constraints, PNG has been warned that medium-term plans for fiscal consolidation could become more challenging.
O’Neill said: “These (economic updates) came just days after the treasurer (Ian Ling-Stuckey) announced that PNG would be borrowing a further K3.2 billion on top of the K1 billion we had already borrowed from the IMF in 2020.
“Since late 2020, we have had record-high commodity prices for our main exports of gold, copper, and LNG. Most of us realised these good times would not go on forever.
“But the Government, instead of saving the windfalls, opted to shut one of our largest earners, Porgera, and borrowed big.”
He added that in the past four years, the Government had increased “how much money we owe by almost double to around K50 billion”.
“How is it that the treasurer has managed our economy so badly that we now must borrow over K4 billion in the last two years from the IMF?” O’Neill asked.
“One of the most important measures of debt affordability is reported as the external debt service ratio.
“It measures how much of our exports needs to be used to repay (PNG’s) loans.”
He added that the IMF report stated that in 2019, PNG needed only 1.2 per cent of its exports to repay its loans.
“This year, we will need three per cent of our exports to repay our loans,” O’Neill said.
“This climbs to a very worrying 6.20 per cent in 2028, according to the IMF.
“To put this in simple terms, our debts are doubling every four years, and our ability to repay our debts is under stress.
“So stressed that one of the agreements of the new IMF loan is that we will not pay anything back until in five years’ time.”