In a nine-page letter, the PM responded to the 10 points raised by the universities.
“This matter is before the Court and as such it would be sub judice for me to discuss several aspects at this stage. However I wish to clarify misunderstanding and confusion over this borrowing,” O’Neill said.
“This loan was obtained to secure our national interest in one of Papua New Guinea’s premier business asset, Oil Search Limited. If we had not done so, this Company, which is worth billions of US Dollars, would have been controlled by foreign interests.”
“The 2015 supplementary budget was necessitated by the sharp decline in world commodity prices for some of our major exports, including oil products. The global slump in commodity process affected many of the countries around the world, whose national finances are dependent on exports. Papua New Guinea was no exception.
“As such the Government had to re-adjust the budget accordingly. The areas affected were: (i) non-essential expenditure, (ii) consumption expenditure, and (iii) projects and programs that were delayed due to slowness in procurement processes. It is important to highlight that key investments in education, health, free tuition fees, infrastructure, and law and order were barely adjusted.”
3.Paul Paraka Lawyers
“As this matter is in Court, again it would be improper to debate on this issue. However, there are some facts, which students and the public ought to know,” stated the PM.
(a) Paul Paraka Lawyers were engaged by the Somare Government in 2002 and they were paid millions of kina in legal fees without interruption by the Government since 2002.
(b) Taskforce Sweep was established by the O’Neill Government to investigate unexplainable spending by the Somare Government through the Department of National Planning & Monitoring. It is important to note that payments to Paraka Lawyers were “not” the original part of the Terms of Reference.
“The questions that need to be asked are: Why I and others are being charged, when Paul Paraka Lawyers have not been prosecuted by the Police to establish that there was fraud? Is this the logical thing to do? Or is there another ulterior motive behind this?” said O’Neill.
4.Turbine power generators
The PM said this matter is also in Court. However, he wishes to make the following points to clarify misunderstanding:
- The decision to acquire two dual turbine generators by the Government was to assist PNG Power Limited address power shortages in Port Moresby and Lae.
The PM said both generators are currently being utilised by PNG Power Ltd in Lae and Port Moresby.
“It is not a waste of public funds as it is an investment that is worthwhile. This was demonstrated by the supply of additional 25MW to both Port Moresby and Lae, which also enabled us to successfully host the Pacific Games with uninterrupted power supply.
“The amount for this purchase was K94 million, and not K144 million as some have suggested. In fact, the generators were purchased at a substantially discounted price.”
5.Distribution of District Services Improvement Program (DSIP) funds
“The PSIP and DSIP are not constitutional grants for the districts and province. These are a policy initiative by the Government to transfer funds from Waigani directly to the provinces and districts.
“These funds are used by the districts and provinces to invest in health, education, law and order, infrastructure and economic empowerment,” said O’Neill.
He said the suggestion that districts are entitled to DSIP is false. The DSIP is not a constitutional grant.
6.Independent institutions and the bureaucracy
“Compared to some past Governments, this is the only Government in Papua New Guinea’s political history to maintain stability in the public service. All the appointments of heads of Constitutional and State Agencies are merit based and in full application of processes established by the Constitution and Laws.”
The appointment and decommissioning of Ministers is the prerogative of the Prime Minister. “This is embedded in the Westminster Parliamentary system,” said O’Neill.
PNG’s total public debt is K18 billion, and of this, K3.9 billion, (5.5 percent of 2015 GDP) is external debt, said the PM.
“The entire external debt is concessional from bilateral and multilateral sources, such as the World Bank, ADB, EXIM Bank, JICA and others. These loans attract low interest rates and long grace and repayment periods.
“PNG does not have a debt issue. This is because our debt is largely domestic and concessional and as such countries do not default on these types of debts. In essence, Papua New Guinea has a very low debt burden and a negligible foreign currency burden.”
“The budget deficit for 2015 was 3.9 percent of GDP, not as 9.9 percent as some claim.
“Papua New Guinea’s national accounts are published annually and are available and accessible by the public. For the 2016 fiscal year, it is projected at 3.1percent. These ratios are revised based on new GDP data released by the National Statistics Office in March 2016.”
“When this Government came into Office in 2011, there was zero balance in the Waigani Public Accounts. Even the trust accounts, where surpluses had previously been held, were empty. We are talking about K8 billion in surpluses, generated through windfalls from high commodity prices,” said the PM.
“This Government had no choice but to formulate a MTFS (medium term financial strategy) based on deficit financing to rejuvenate the economy and deliver services to our people. The MTFS provides a five-year fiscal plan for annual national budgets.”
“I cannot comment on this issue as it is part of the monetary policy apparatus, which is independently managed by the Central Bank. The Government, through the Ministry of Treasury, have been consulting closely with the Central Bank to address the foreign currency issue.”
O’Neill said he has no intention of either stepping aside or resigning from the Office of the Prime Minister.
“The people that have the legal mandate to remove a Prime Minister from Office are the National Parliament or the people at the General Election. I was mandated by the people in 2012 and duly elected by Members of Parliament, and I intend to uphold and respect their mandate until 2017 General Election.”