State debt is K51billion, says BPNG

PHOTO: DevPolicy/Johan10 (Adobe Stock)

Papua New Guinea’s total debt at the end of June was K51billion (US$14 billion), which is expected to increase to K54 billion (US$15 billion) by the end of the year, according to the Bank of PNG.

The K54 billion (US$15 billion) at the end of 2022 is around 53 percent of the country’s Gross Domestic Product.

Bank of PNG acting governor Benny Popoitai said the increase in the debt level over the years had resulted in the higher debt service payments.

“This is a major expenditure item in the Government’s budget and is an opportunity cost to providing services to the people,” Popoitai said.

“While debt increased significantly over recent years, majority of foreign debt is concessional with low interest rates and long-term maturities.

“This implies that the burden of debt repayment is shifted to future period at the expense of future generations.

“Therefore, any new borrowings should be put to productive use to grow the economy, especially the non-mineral export sector to increase the Government revenue base and foreign exchange earnings to repay future loan obligations.

“The Government should seriously consider net retirement of some debt from windfall tax revenue and reduce budget deficit to ensure that debt level is sustainable to achieve fiscal consolidation in the medium term.”