Papua New Guinea’s Government is in talks with the global credit rating agencies, S&P Global and Moodys in an effort to lower the country’s credit rating.
Minister for Treasury Ian Ling-Stuckey said PNG has never defaulted on an international loan, however, it has always been considered as below “credit grade” since rankings began in 1999.
He said the purpose of the meet is to outline PNG’s prospects and pressures and to identify if there is a chance of more foreign investment because of increased confidence in PNG’s economic management.
“The current S&P ranking of PNG as ‘B’ places PNG in the ‘highly speculative’ category in the international community,” Ling-Stuckey said.
“This simply means that we and our PNG global firms face much higher interest rates.”
The Treasurer said if they consider the PNG economy and budget management is doing well, there is a chance of lower interest rates for PNG’s business community.
The global credit ratings agencies such as S&P are considered as independent umpires on how an economy is performing or a global firm (such as BSP).
In particular, they focus on risks, especially loan repayment risks, and traditionally, they have focused on the risks of a country or firm defaulting on a loan,” Ling-Stuckey said.
He said lowering this perception of risk in the PNG economy can be achieved through the honest and transparent sharing of information.
“We experienced a hiccup last year when there was a misunderstanding about the legitimate refinancing of a loan for the disastrous agreement on Solwara and undersea mining,” Ling-Stuckey said.
“If we don’t tell credit rating agencies the true situation, they will naturally fear the worst.
“I wanted to talk to them in person to help build confidence in the Marape-Rosso economic reform agenda.”