The National,Wednesday 07th December 2011
GOVERNMENT will seek parliamentary approval to raise nearly K1.4 billion in a Loans Bill – K500 million of which is to cover over-expenditure in this year’s budget.
The remaining K900 million is to finance the state’s participation in the PNG LNG project.
The government will seek parliamentary approval to borrow K500 million to cover the over-spending of the 2011 budget.
The bill is to give authority to borrow the K500 million between Dec 1 and Dec 31 this year.
During his budget speech, Finance Minister Don Polye only addressed the K900 million shortfall to finance the state’s share in the LNG project.
The K500 million was also listed in the Loans Bill.
Last week the Opposition revealed in the media that the public account cash position had been depleted by K500 million.
They claimed it was unlawful because it was expended without complying with the Public Finance Management Act and Appropriation Act.
Polye in response said the claim by the opposition was all hogwash and misleading.
“There has never been any unlawful and illegal expenditure of whatever amount as claimed by the Opposition,” Polye had said.
“We are working within the confines of the Public Finance Management Act, the Fiscal Responsibility Act, Medium Term Strategies and Vision 2050.
“The economy is in safe hands and we believe in prudent management.”
Prime Minister Peter O’Neill also said last week he would not apologise to anyone for the K500 million spending by his government in the past three months in office because it was budgeted for.
On the K900 million shortfall, Polye told parliament that deals to finance the state shareholding could have been done better.
“In particular, the PNG LNG financing deal for the government’s shareholding did not manage the foreign exchange risks of the loan,” he said.
“The O’Neill-Namah government was presented with a choice – sell part of the government’s share in the project at below market value or finance its full share in the most effective fashion possible.
“As the PNG LNG project is so important to our future in replacing declining mineral revenues, the government has decided to maintain our 19.4% share. This will require an additional financing of K900 million.”
He said given the nature of the financing and international reporting standards, the financing would not impact on the fiscal balance other than through higher interest costs.
“However, consistent with the Constitution, this financing does require an appropriation passed by parliament.
“The government is, therefore, introducing the need for this financing in a transparent manner, and will obtain the required parliamentary approval for an appropriation.”