K1.2bil approved to help Govt pay debts created by Covid-19

THE International Monetary Fund executive board has approved the disbursement of K1.2bil (US$363.6 million) in emergency financing to help PNG address urgent balance of payments needs created by the Covid-19.
It was approved under the Rapid Credit Facility (RCF).
IMF said its financing support provided resources to the authorities to maintain macroeconomic stability, with the aim of helping the private sector adversely affected by the Covid-19.
Deputy managing director and acting chairman Tao Zhang said PNG was facing headwinds at a time when its economy was “already fragile and had limited fiscal space”.
“The Covid-19 pandemic is expected to have a significant negative impact on domestic economic activity and growth,” Zhang said.
“The fall in global prices for some of its major exports is posing additional challenges.
“These developments have led to a sharp fall in export revenues and an urgent balance of payments financing need.
“IMF support, through the RCF, would help meet immediate financing needs and should catalyse financial support from development partners.
“The authorities have taken quick action and implemented measures to prevent transmission and spread of the Covid-19 virus.
“They have also taken a series of policy measures, including fiscal and financial measures, to support activity and incomes, despite a substantial fall in government revenues.
“With very limited fiscal space, measures have focused mainly on redirecting spending toward key services, including healthcare, easing access to private savings, and avoiding a credit crunch.
“Assistance from development partners is needed to close the balance of payments gap and to help address the fiscal shortfall.
“To strengthen confidence in their commitment to the appropriate use of financial support, the authorities have taken strong steps to increase transparency and accountability for Covid-related spending.
“They have also taken action to implement key structural benchmark measures in the staff-monitored programme to underscore their ongoing commitment to the reforms embodied in that programme.
“The Government of PNG has taken measures to support businesses, workers and households to safeguard the health and livelihoods of the population.
“The Covid-19 pandemic is hitting the PNG economy hard through export losses and the impact of measures to mitigate transmission of the virus.
“The crisis erupted as the Government was beginning to implement wide-ranging reforms under a staff-monitored programme.”