INTERNATIONAL BONDS MARKETS AND BANKS DON'T TRUST O'NEILL LIES AFTER SOVEREIGN BOND FAILURE
by MICHAEL JOSEPH PASSINGAN
On 17 March PNG Blogs revealed that Peter O’Neill has secretly begged the World Bank for a loan of up to K1 billion.
On 22 March we revealed that international agencies are about to downgrade Papua New Guinea’s credit rating once again – after already being downgraded late last year.
Now some good news – the economy and national finances have been damaged so badly by O’Neill’s reckless borrowing and wasteful spending that his proposed $US1 billion sovereign bond issue is dead - D.E.A.D.
This is good news because it means the nation’s indebtedness will not increase by $US1 billion in the immediate future. It means the long-suffering people will not have more debt to repay each year.
IT MEANS THERE WON’T BE $US1 BILLION FOR O’NEILL TO STEAL AND WASTE
The failure of the bond issue proves that international money markets won’t lend a toea to O’Neill’s corrupt regime unless it is at unaffordable penalty interest rates.
Such unaffordable interest rates would have taken annual interest payments on the national debt above K3 billion and would have worsened the suffering already being felt by the people in the streets and the villages.
The failure of the sovereign bond issue and the credit ratings disaster are proof that O’Neill, PNC and their cronies and colleagues have destroyed the nation’s economy.
Its shows that O’Neill, Treasury Secretary Daire Vele, Bank of PNG chief Loi Bakani and economic adviser Jakob Weiss are fools and liars.
Their spin, faithfully repeated by their paid dogs at the Post-Courier, the National and EMTV, is not to be believed.
MORE LIES FROM THE KING OF LIES.
O’Neill blamed everyone and everything except himself and his greed and stupidity for the failure of his sovereign bond issue.
He said the global market is affecting all countries worldwide and not only PNG which is the reason for not going ahead with the borrowing.
The real factual truth that O’Neill, Vele, Bakani and Weiss want to hide is that no-one will lend to a country that can not repay its debts.
The international bond markets are operating as usual.
The problem is O’Neill and his advisers – banks don’t believe their bullshit.
THE SECRET WORLD BANK LOAN BID IS MORE PROOF THAT THESE KON MEN ARE SENDING PNG TO RUIN.
O’Neill has finally confessed that the central bank – being advised by his crooked crony Jakob Weiss – is begging the World Bank for $US250 million (almost K800 million).
O’Neill needs this quick and dirty cash injection so he can try to repair the damage he, Weiss, Vele and Bakani have done to the exchange rate and foreign reserves.
Thanks to these four, PNG’s foreign reserves are getting closer and closer to the lowest levels ever – set by O’Neill’s crooked PNC predecessor Bill Skate. The exchange rate is also falling to the record lows – also set by Skate.
It is notable that during the Skate years O’Neill was in charge of PNGBC, stealing as much as he could and writing off loans to his cronies, Weiss was an adviser to the central bank, and Daire Vele’s father Morea was BoPNG Governor.
Together, all three have a history of theft, economic mismanagement and reckless financial behaviour.
THE SO-CALLED IMF LOAN IS MORE PROOF THAT O’NEILL HAS DESTROYED THE ECONOMY AND NATIONAL FINANCES.
For a start the secret IMF loan will not be an IMF loan, as O’Neill claims.
It will be a line of credit from the World Bank’s International Finance Corporation and will be paid to the commercial banks, BSP, Westpac and ANZ.
EVEN THE IFC, A LENDER OF LAST RESORT, DOESN’T TRUST O’NEILL AND HIS CRONIES.
PNG was originally seeking a line of credit of $US300 million (about K1 billion). But the IFC wasn’t prepared to lend that much, and instead discussions are centred on a maximum of $US250 million (about K800 million).
A problem for PNG is that there is a backlog of billions of kina worth of requests for foreign exchange because Loi Bakani and Jakob Weiss at the Bank of PNG have limited supply of forex in a desperate attempt to stop the collapse of the kina.
A $US250 million loan won’t solve the problem. It will be a quick fix and just delays the crisis for a few more months (by which time O’Neill is into the 12 month grace period before the 2017 elections).
It’s a fake loan being arranged to buy some time for O’Neill and his cronies.
The line of credit, if it is approved, will do nothing to alleviate the suffering of the people.
What it will do is enable the private sector to quickly repatriate profits overseas. Companies will say they are using the money to fund imports, but the reality is that most will simply park as much of it as possible offshore.
It will not be kept in PNG and invested in domestic assets and growth
The only beneficiaries in the short term will be private companies (mostly foreign) and the banks (mostly foreign).
And who in the end will pay to bail out mainly foreign companies and mainly foreign banks? The long-suffering people of PNG of course.
The line of credit will enable the banks to take on more government and state-owned enterprise debt, which will in turn prop up the rotten O’Neill Regime.
The accompanying graphs show how the commercial banks, led by BSP, have fueled O’Neill’s debt feeding frenzy.
The IFC line of credit will just make matters worse.
It will for sure add to the debt burden that Papua New Guineans must repay.
O’Neill is telling everyone it is an IMF loan to mislead people that this is a proper structural adjustment program.
It’s not and if it is approved will do nothing to consolidate and rehabilitate government finances, expenditure prioritization and control of the O’Neill Regime’s rampant corruption.
It will end up supporting and feeding O’Neill’s corruption, waste and mismanagement. And in a few months time, a new loan will be needed and the people of PNG will be poorer.
All of PNG, except Peter O’Neill, his greedy cronies and banks and foreign companies, hope that the World Bank sees sense and rejects this cheap and dirty deal.
Because the only thing that can save PNG now is a new Government armed with a proper Structural Adjustment Program to attack O’Neill’s legacy of corruption, reckless borrowings and wasteful spending.