Bakani clarifies govt borrowing

BANK of Papua New Guinea Governor Loi Bakani says the Government’s overseas borrowing is to finance the budget and support the foreign exchange market.
He said the Government currently owed K23 million in domestic debt.
Bakani said that could lead to a situation where the lender could not take any more.
He said the Government then had to look for different lenders and that was overseas.
“We have moved quickly on the sovereign bond,” Bakani said.
“Prior to the sovereign bond, we engaged in the Credit Suisse loan, which was finally drawn down last year.
“The objectives of the Government are very clear. The Government puts those proceeds into retiring some of the domestic debts – which is what the Treasurer (Charles Abel) has been emphasising.
“Reduce some of the domestic debts, repay some of the Treasury bills, holders of Treasury bills and Treasury bonds.
“That was done last year.”
Bakani said there was a “small increase” now in foreign debt with domestic debt being retired.
“Prior to that, foreign debt has been very small,” he said.
“That was mainly from concessional sources like ADB (Asian Development Bank) and the World Bank.
“Also over the last few years, the Government got in China Exim Bank loans also.
“They are very-concessional long-term (loans).
“It will not impact on the Government’s debt payment over the next five years.
“Those debts are long-term and Government will repay them for over 10 years.”