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O'NEILL'S SECRET LOAN FROM IMF/WORLD BANK SEEN AS LAST RESORT TO PROP FAILING ECONOMY

by MICHAEL JOSEPH PASSINGAN

The foreign banking system is bringing more bad news for Papua New Guineans suffering under the corruption, waste and reckless financial and economic management of the O’Neill Regime.

The International Monetary Fund, an arm of the World Bank, is lending almost K1 billion so commercial banks – BSP plus the two main foreign-owned banks ANZ and Westpac – can prop up the bankrupt government of Peter O’Neill.

The fact that the IMF is a lender of last resort to failed economies illustrates exactly how bad the nation’s economic and financial problems are.

The fact that the O’Neill Regime and the Bank of Papua New Guinea are keeping this loan secret adds to the fears that is a very bad deal for Papua New Guinea.

The K1 billion, to be managed by the central bank, will allow the commercial banks to continue to buy government investments such as Treasury Bills, Inscribed Stock and Central Bank Bills, and possibly lend more money to State-Owned Enterprises.

As a result this debt will have to be repaid by the Government.

At the end of 2015 the Government was having to repay K1.5 billion a year in interest on its official debt.

This is more than it spends on health, education and transport, whose Budget allocations are each being cut below this amount by Prime Minister Peter O’Neill.

But borrowings planned for this year will increase the annual interest bill to at least K2.3 billion this year, and possibly close to K3 billion.

It is this debt that is killing Papua New Guinea and making life more difficult than ever for ordinary Papua New Guineans.

Food prices are endlessly rising The Bank of Papua New Guinea says they rose almost 25% in the 12 months to December 31 last year.

Hospitals, health centres and rural clinics are unable to buy medicine and other medical supplies, leaving them unable to treat sick and dying people.

Teachers, health workers and other people responsible for delivering essential services are not being paid, or are being paid a fraction of their wages and entitlements.

O’Neill has had to cut budget allocations for health and education so much that his Free Health Care and Fee Free Tuition policies are no longer working.

He cannot even find the necessary funds to fight tuberculosis and malaria.

O’Neill blames falling commodity prices for PNG’s financial crisis – but it is his debt that is to blame.

Every country in the region has suffered from the commodity price fall, but none is now on the brink of bankruptcy like PNG.

The only difference between PNG and other economies is O’Neill’s irresponsible borrowing and reckless spending on bilas projects in Port Moresby.

The K1 billion IMF loan facility will make Papua New Guineans even worse off.

A portion of it will be profit for BSP and the foreign banks, a portion of it will be stolen by O’Neill and his cronies, and the rest of it will be wasted.

And the people will pay.

No one knows what the interest rate on the loan is, but there is a good chance that it will be sky-high because of PNG’s sovereign risk and the credit-rating downgrades last year.

If the IMF/World Bank and Bank of PNG had any sense of responsibility and were acting in a transparent and accountable way, they would have made a public announcement of the loan, stating the terms.

They should also have insisted that a condition of the loan be that O’Neill’s failed policies should be scrapped and a structural adjustment program put in place to prevent more of O’Neill’s corruption, waste and mismanagement.