Nation likely to plung into inflation if O'Niell the "bush economist" keeps with his myrad of ill advised spending
By MARK DAVIS
The economic crisis caused by the Prime Minister's mismanagement of the nation's finances may be about to get much worse
The Government is facing a payout of up to $US300 million in a legal dispute over the disastrous IPIC bond issue used to finance PNG's participation in the LNG Project.
The case, brought by IPIC against the Government represented by the Independent Public Business Corporation, begins tomorrow in the Equity Division of the Supreme Court of New South Wales.
A decision is likely within a month
IPIC is seeking a payment of $US300 million (K700m plus at today’s rates) from PNG as part of the settlement of the IPIC bond issue.
IPIC had the right to convert the bond into Oil Search shares, which it did.
It also had the right to a cash component under the terms of the bond issue.
The Supreme Court case is over the amount that is owed to IPIC, which is claiming $US300 million.
It will blow yet another mighty hole in the Budget, which is already under pressure from the Prime Minister's mismanagement of the economy, especially government borrowing and spending, and rampant corruption.
Wasteful and unproductive spending, for example on lavish Prime Ministerial and Ministerial travel expenses, and irresponsible borrowings - for example the Prime Minister's UBS loan - are the major Budget problem areas.
The Prime Minister's lack of economic discipline had already brought about a planned Budget deficit of K2.3 billion, or an enormous 6 percent of GDP.
Of that, K1.2 needed to be borrowed.
Now it is estimated that the Budget has plunged an extra K400 million AT LEAST into the red.
The addition of as much as $US300 million in new debt will deepen the Prime Minister's economic crisis and put further pressure on ordinary Papua New Guineans.
Inflation is likely to continue to rise, with ever higher prices for staple foods such as rice, tinfish and bully, clothing, fuel and household goods. Interest rates are also likely to rise and the value of the kina fall even further.
The Government is facing a payout of up to $US300 million in a legal dispute over the disastrous IPIC bond issue used to finance PNG's participation in the LNG Project.
The case, brought by IPIC against the Government represented by the Independent Public Business Corporation, begins tomorrow in the Equity Division of the Supreme Court of New South Wales.
A decision is likely within a month
IPIC is seeking a payment of $US300 million (K700m plus at today’s rates) from PNG as part of the settlement of the IPIC bond issue.
IPIC had the right to convert the bond into Oil Search shares, which it did.
It also had the right to a cash component under the terms of the bond issue.
The Supreme Court case is over the amount that is owed to IPIC, which is claiming $US300 million.
It will blow yet another mighty hole in the Budget, which is already under pressure from the Prime Minister's mismanagement of the economy, especially government borrowing and spending, and rampant corruption.
Wasteful and unproductive spending, for example on lavish Prime Ministerial and Ministerial travel expenses, and irresponsible borrowings - for example the Prime Minister's UBS loan - are the major Budget problem areas.
The Prime Minister's lack of economic discipline had already brought about a planned Budget deficit of K2.3 billion, or an enormous 6 percent of GDP.
Of that, K1.2 needed to be borrowed.
Now it is estimated that the Budget has plunged an extra K400 million AT LEAST into the red.
The addition of as much as $US300 million in new debt will deepen the Prime Minister's economic crisis and put further pressure on ordinary Papua New Guineans.
Inflation is likely to continue to rise, with ever higher prices for staple foods such as rice, tinfish and bully, clothing, fuel and household goods. Interest rates are also likely to rise and the value of the kina fall even further.
