By HELEN TARAWA
Papua New Guinea must invest significantly in infrastructure to broaden its economic base, says the Asian Development Bank.
Vice-president of ADB for East Asia Southeast Asia and the Pacific Stephen Groff told The National that investments by other countries and multilateral development institutions in infrastructure were critical to build a strong foundation for future economic growth in PNG.
“There is massive infrastructure investment in Papua New Guinea that will help grow the agriculture sector, other non-mining and oil and gas sectors of the economy,” Groff said.
“Investments by China or other countries, or multilateral development institutions in infrastructure are critical to build a strong foundation to future economic growth in the country.
“The only issue is making sure that the terms and conditions around that lending are very clear.
“If you don’t have clarity around conditions, you don’t know what the impact of that additional increment of borrowing is on debt sustainability.
“You also don’t know whether the payments you have to make on that borrowing will be met by increased economic activities.
“You need to make sure that investing those additional funds into productive economic assets will grow the economy in such a way that you can pay back.”
Groff said PNG’s debt issues were not severe at the moment.
“Borrowing is not out of line with regional competitors and ADB’s other developing member countries,” he said.
“The challenge, specifically for PNG, is the interest rates on some of those borrowings.
“A lot of work has been undertaken by the Government to restructure that portfolio of borrowing should reduce the interest rates and payments that go along with that
“We are not overly concerned about debt or borrowing in Papua New Guinea.
“We do think that the Prime Minister Peter O’Neill and Deputy Prime Minister and Treasurer Charles Abel are working very hard in addressing these issues.
“We will continue to work with the Government of Papua New Guinea.
“We have a country partnership strategy with PNG that we will essentially look at expanding.
“We look forward to deepen and strengthen relationship over time.”
By HELEN TARAWA