Govt’s financial decision queried

The Shadow Minister for Treasury and Finance has queried why the Government did not accept financial offers from the private sector.

In a statement, Ian Ling-Stuckey said: “If you have a large number of suppliers with outstanding bills, and you have a viable means of financing, you should pay the bills. Saying no to the K570 million extra available over the last two weeks, especially in the context of the increased funding needs for our earthquake victims, is both incompetent and seems heartless.

“What is even more extraordinary is that even with these offers from the private sector to help with financing this government’s generally bloated budget, the government didn’t even accept as much as it actually asked.

“On 7 March, it asked for K357 million, the private sector was willing to fund K587m, but then it decided to only accept K287m. This was K300m less than was available, and K70m less than asked for.

“On 14 March it asked for K299m, the private sector was willing to fund K536m, but then decided to only accept K266m. This was K270m less than was available, and K33m less than asked for.”

Ling-Stuckey said though he understands the need to keep interest rates down, and to be careful with future bunching of rolling over Treasury Bills, not enough weight is being given by this government to the needs of its people to fund the budget and meet the extraordinary earthquake emergency.

“PNG’s Treasurer needs to explain to the people of PNG why he can’t manage the cash flow better,” stated the Shadow Minister.

He reiterated that people know PNG is facing major cash flow difficulties.

“Almost every day we hear stories of public servants not being paid, government departments being locked out due to non-payment of rent, and delays in meeting payments for schools, health centres and private contractors.

“Indeed, at the start of this month, there was a leaked memo from the Bank of PNG highlighting the cash problems facing this country.

“The large gap between the government’s high levels of expenditure and low levels of revenue has to be financed somehow. The major form of financing is going through the weekly Treasury Bill auction process managed by BPNG.

“This seeks to raise money from PNG’s banks and superannuation funds to finance the deficit.

“Each week, a public debt committee determines how much money needs to be raised. This is called the offer amount. Usually, the private sector is not willing to provide all this funding (called an undersubscription), and the government has to turn to BPNG to effectively print money under the so-called ‘slack arrangement’. This is bad monetary policy and reflects a lack of discipline on government excesses.

“However, when the private sector is willing to provide funds, then it makes sense to draw on this available cash to clear debts,” stressed Ling-Stuckey. 

Author: 
Press release