K920m sought for budget


THE government is in discussions with the Asian Development Bank (ADB) for a US$300 million (K920m) budget-support loan, according to Treasury Minister Patrick Pruaitch.
This was announced last Thursday at the signing of a $US120 million (K368 million) loan deal by the Government and the bank to repair and upgrade the Highlands Highway.
In total, nearly K1.3 billion is to be borrowed from the bank on this occasion.
“I would like to announce that I had fruitful discussions with the ADB’s director general during his recent visit to Papua New Guinea,” Pruaitch said.
“One of these discussions included a possible US$300 million (K920m) budget support.
“This type of assistance will enable the Government to restructure the Government’s domestic debt portfolio to keep the Government’s debt stock at prudent levels.”
Pruaitch acknowledged that such loans added onto the country’s debt exposure and would require structural adjustments to the debt portfolio.
He said there would be undesirable consequences if policy restructuring did not happen.
“Though these assistance from ADB and other multilaterals are concessional policy based loans, such loans do add to the country’s debt exposure,” Pruaitch said.
“Without restructuring and rebalancing the debt portfolio, the Government’s ability to service its debt will deteriorate, resulting in undesired consequences. This could happen if corrective actions such as debt restructuring do not happen.”
Pruaitch expressed his appreciation to ADB for its continued support in complementing ongoing development efforts in the country.

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