The recent signing of the loan agreement for Japan’s K1 billion budget support marks continued international support for the Marape-Basil Government’s economic reform program.
Treasurer Ian Ling-Stuckey said the K1 billion provided to the 2020 Budget was welcome support from a long-standing partner and demonstrated the confidence partners had in PNG's economic recovery.
“The assistance was provided as a very, very cheap loan, with an annual interest rate of only 0.01 percent (one-hundredth of a percent), a 15 year loan term and 4 years before any loan principal repayments are required,” stated Ling-Stuckey.
“Funds were allocated to the urgent fight against COVID-19, and general health measures.”
In 2020, the Government allocated over K600 million in the fight against the global COVID-19 pandemic, as well as an estimated more that K1,800 million for the health sector.
Japan's support was in addition to the Government's broader efforts to stabilise the economy and government finances, to support priorities in education, economic development and infrastructure, and to undertake specific activities such as the repayment of arrears, foreign exchange support and debt management.
“This K1 billion is an international vote of confidence in the Marape-Basil Government’s strategies to rebuild Papua New Guinea,” the Treasurer said.
“It also recognises the government’s greater budget transparency and financial accountability, new measures to measure and report debt, more disciplined government spending and responsible borrowing policies.
“The government in 2019 moved to an economic reform program. As part of this PNG-owned reform program, we asked for friendly, foreign support.
“When we released this strategy as part of the 2019 Supplementary Budget and formalised further in the 2020 Budget, the government knew that it would be difficult to achieve the planned financing.”
Ling-Stuckey said the success of the Government’s strategies for national recovery can be gauged by the fact that it has exceeded its K3.76 billion borrowing target in the 2019 Economic Reform Program by raising K4.34 billion.
“If the original K1.03 billion Australian funding is included, the total raised is K5.38 billion,” he said.
“All of this funding is on concessional terms ranging from zero to 1 percent, enabling the Government to substantially reduce the ratio of annual debt interest repayments to spending and allocate more to social and economic development programs.
“2020 was a very difficult year for Papua New Guinea and the world because of the severe impact of coronavirus,” Ling-Stuckey stated. “This loan from Japan, and the other funding from our international partners and supporters, has made all the difference.
“It has allowed us to survive 2020 and continue implementing the rest of our national recovery agenda.”
The Treasurer said Japan’s generosity should be seen in the context of its own difficulties in dealing with COVID-19.
“We have all suffered through this pandemic,” he said. “But what it has done is shown us how important the international community is, and how well we work when we come together to support each other.
“Papua New Guinea is grateful for this.”
(The signing ceremony for K1.02 billion between the Government of PNG and Japan, through JICA)