Govt progressing work on SWF

The National Business

TREASURER Ian Ling-Stuckey says the establishment of the Sovereign Wealth Fund (SWF) is progressing.
“Work in progress awaiting National Executive Council submission,” Ling-Stuckey said.
Prime Minister James Marape said last year that seven per cent of dividends from state-owned entities would go to the SWF.
According to Treasury, the country’s SWF would be an important mechanism to manage external shocks to the economy, to support the budget to fund priority areas such as education, health and infrastructure, and to invest for the benefit of future generations.
Objects of the SWF were to support:

  • Macroeconomic stabilisation;
  • Intergenerational equity; and
  • Asset management in relation to financial assets accrued from mineral and petroleum receipts.

Executive Dean of the School of Business and Public Policy at the University of Papua New Guinea Prof Lekshmi Pillai said the concept of SWF was good for any country.
“This is evident from European countries, Western Asia, Singapore, etc.
“The important aspect is how it is managed and will be managed. The management aspect starts with the goals and purposes of the SWF and flows down,” he said yesterday.
Marape had said that the Government intended to use the facility this year.
“It will instill a savings culture for our Government,” Marape said.
Ialibu-Pangia MP Peter O’Neill said earlier that the guidelines on the operation of a SWF must be transparent.
He said the fund should be free from political influence.
Meanwhile, according to information from Treasury, Organic Law on the SWF was passed by Parliament in July 2015 and the Fund was to come into operation in 2016.
The PNG SWF will be onshore managed, offshore invested and onshore spent and it will be fully integrated with the budget and fiscal frame work.
The SWF will have two funds, the stabilisation fund and the savings fund, managed under a single governance frame work.
Tax revenues received from mining and petroleum projects, including the PNG LNG project, will be directed to the stabilisation fund, and be available to be drawn down into the budget to fund expenditure needs. When revenue flows are large, the excess will be deposited into the savings fund.