PNGBLOGS

by MOODYS CREDIT RATING Moody's places PNG's B1 government ratings on review for downgrade Global Credit Research - 25 Feb 2016 Moody's Investors Service ("Moody's") has placed the Government of Papua New Guinea's ("PNG") B1 local currency and foreign currency issuer ratings on review for downgrade. The review for downgrade is driven by: 1. The impact of the further fall in oil prices on government revenue, fiscal deficits and rising debt; and 2. A likely structural shift to lower economic growth given the increasingly uncertain outlook for commodity-related investments. RATINGS RATIONALE RATIONALE FOR THE REVIEW FOR DOWNGRADE FIRST DRIVER - DETERIORATING FISCAL AND DEBT METRICS Lower oil prices and weather-related disruption to gold production led to weaker-than-expected revenue in 2015, and we expect pressures on revenue to continue through 2016. Although expenditure cuts in 2016 have been announced in respons

by MICHAEL J PASSINGAN Prime Minister Peter O’Neill reckless, corrupt and unnecessary borrowing is hurting families and crippling the nation with debt that future generations must pay. In 2015 actual Government debt reached K18,571.40 per household under O’Neill. That number will increase with new borrowings proposed by the Prime Minister, including the $1 billion sovereign bond issue. Families must repay O’Neill’s debt whether they like it or not. Repayment will require new domestic revenue-raising and cost-savings: Higher personal and corporate taxes as well as a 50% increase in the GST Increases in SOE fees and charges such as O’Neill’s secret rises for all MVIL services including registration and insurance A further decline in government services and outsourcing of service provision to the Prime Minister’s colleagues and cronies A fire sale of government assets and equity including SOEs such as PNG Power and Air Niugini to the Prime Minister’s col

by MARK PARAKISAN S ensitive questions to break out the truth: WHY WAS PETER O'NEILL SO DESPERATE TO SECURE THE UBS LOAN? THE BEANS ARE SPILLING OUT. The very sad details about the UBS loan has been revealed. Knowing all this, one starts wondering why from all accounts, Peter O'Neill expressed more than happiness when the deal with through and the Oil Search shares were bought. Witne sses say he was overjoyed. Overjoyed? Anyone who knows Peter O'Neill knows that he is a man of few outward emotions. Yet, the UBS deal obviously meant something big to him. Very very big. There are 2 very obvious possibilities: Peter O'Neill was either receiving the proceeds of corrupt commissions, or he was profiting greatly off selling shares of Oil Search as the UBS loan co-occurred with the peak Oil Search price. "Corrupt commissions" are when someone with insider knowledge sets up a crony (or a relative) to be in charge of facilitating

by PAUL FLANAGAN   The PNG Government released its Mid-Year Economic and Fiscal Outlook ( MYEFO ) on Monday – the update on the 2015 budget. The estimated budget deficit for 2015 blows out from an already high budgeted 4.4% of GDP to 9.4%. This would be the highest in PNG’s history. Public debt levels are expected to skyrocket from the earlier estimate of 27.8% of GDP to 41.3%. In Australia, such a rapid change in the estimated fiscal position would go well beyond being termed “a budget crisis”. PNG’s official figures are much worse than at the time of PNG’s last economic crisis at the end of the 1990s (see graph below). PNG expenditure and revenues as a share of GDP – with updated figures from 2015 MYEFO Note: The gap between the lines indicates the size of the government deficit or surplus. Both lines exclude grants (aid). The drivers for the rapid deterioration in PNG’s fiscal situation are the fall in international commodity prices, a growth slow down as well

by YAKAN LEPAKALI This article stems from Sunday Chronicle (July 26 2015) titled “Budget Cut and East Sepik to lose K276 million in 2016”. According to the above article, public machinery in ESP is into crisis management mood to make adjustments and take drastic steps with stringent measures to cut back on unnecessary expenditure and tighten up in readiness for 2016 budget cut. The article merely featured East Sepik Province; however, same is true with the other provinces in the country. Yet, intriguingly, nothing much is heard from the respective provincial administrations and perhaps waiting for the dream rainfall. Should K276 million cut in reality is somewhat true for all provinces, it is to the tune of K6 billion plus. We don’t know yet how many national departments and state institutions will have their share of the cut in 2016 budget. It was also speculated that DSIP will also suffer cut courtesy of this ruthless totalitarian regime. The predictability o

The O'Neill group on the steps of Parliament this morning. Speaker Jeffrey Nape, has recognized Peter O'Neill as Prime Minister and Grand Chief Sir Michael Somare, declared as an ordinary citizen. Mr Nape stated this, as Parliament resumed this morning, with only the O'Neill/Namah group in the House, with the Opposition side empty and less than 10 M-Ps seated in the middle benches. M-Ps are debating the National Budget. Security is tight at Parliament, with the public disallowed from watching today's proceedings. Meantime, Grand Chief Sir Michael Somare and his Cabinet, are in a meeting with a member of the group saying, they hope to be sworn in later this afternoon. He says, the Governor-General is aware of the court orders which are explicit and is preparing the swearing-in instruments to be signed. The Head Of State, Sir Michael Ogio, has sought independent legal advice on the turn of events yesterday, after the Supreme Court reinstated Sir Michael Somare as th

The O'Neill group on the steps of Parliament this morning. Speaker Jeffrey Nape, has recognized Peter O'Neill as Prime Minister and Grand Chief Sir Michael Somare, declared as an ordinary citizen. Mr Nape stated this, as Parliament resumed this morning, with only the O'Neill/Namah group in the House, with the Opposition side empty and less than 10 M-Ps seated in the middle benches. M-Ps are debating the National Budget. Security is tight at Parliament, with the public disallowed from watching today's proceedings. Meantime, Grand Chief Sir Michael Somare and his Cabinet, are in a meeting with a member of the group saying, they hope to be sworn in later this afternoon. He says, the Governor-General is aware of the court orders which are explicit and is preparing the swearing-in instruments to be signed. The Head Of State, Sir Michael Ogio, has sought independent legal advice on the turn of events yesterday, after the Supreme Court reinstated Sir Michael Somare

ABC Pacific Beat Papua New Guinea's former Prime Minister, Sir Rabbie Namaliu, has called on the Australian government to put more aid money into training and education to help PNG cope with the enormous brain drain being created by PNG's resources boom. In the PNG budget delivered last week, Treasury and Finance Minister, Peter O'Neill announced big increases in spending on education and health. Sir Rabbie Namaliu says these were made possible by the increasing revenue going to the government from the resources boom, but he says that is not enough to deal with the scale of the problem. The former Prime Minister, now chairman of Kina Asset Management, says money currently being paid to high-cost Australia aid advisors would be better spent on training Papua New Guineans. In Port Moresby today, Papua New Guinea's parliamentarians are debating the budget as Sir Rabbie Namaliu explains. Presenter: Pacific Economic and Business reporter, Jemima Garrett Speaker: Former PNG P