Living off debts

By ZARA KANU LEBO
AT least 94,000 public servants throughout Papua New Guinea are living in heavy debt to loan sharks each pay day, Public Service Minister Joseph Sungi says.
This number comprises about 70 per cent of the country’s 134,000 public service workforce, and the dire situation has forced the minister to introduce laws to prevent increased hardships. Sungi told The National that he was working with policymakers to include additional paragraph(s) in the Public Sector Management Act to control the increase in financial loans taken out by public servants.
He said the alteration, once made into law, would allow public servants to only borrow amounts equivalent to 50 per cent repayment on their salaries.
“Anything exceeding half of their fortnight pay, to be deducted for loan repayments, will not be approved,” Sungi said.
The minister made known these facts following complaints from the human resources divisions of various Government agencies and statutory bodies on the extra amount of work being brought on through engagements with fast money loan schemes, or loan sharks.
Actual statistics put the total public service machinery at 133,802 heads, of which 93,661 were living off debts from the loan sharks.
“The proposed law is to safeguard the public service from over-borrowing from these mini finance companies that find refuge in the comfort of the Alesco payroll system when it comes to fortnightly deductions.
“The biggest problem for the public service is that more than 70 per cent of the Government workforce is living in debt.
“This is where finance companies are using the Government payroll as a guaranteed means of getting their returns when approached by public servants for fast and easy loans.
“So, when it comes to take-home pay, public servants often go home with nothing.
“Finance companies see the Government payroll as the easiest and convenient means of making money.
“Once details are entered into the system, come Wednesday when the pay hits the account, the deduction automatically goes through to these finance companies,” Sungi said.
He said there had been numerous complaints from the Human Resource and payroll offices within Government departments on staff exceeding their net pay when accessing loans, which was affecting staff performance and the quality of output.
The National approached 10 mini finance companies operating in Port Moresby, and all had the same requirements – lending only to Government workers on the Alesco payroll system.
For private companies, the financiers said it was a no-deal, as experience had shown problems with repayments.
They said most private companies did not allow pay deductions to small loan firms but only to the larger, established financial institutions.
Sungi said many debtors ended up paying double the amounts borrowed due to the high interest rates charged by the loan sharks.
“This is the biggest problem we have in the entire public service, and we are now looking at ways to address this.
“Public servants must blame themselves, not the Government nor Treasury nor Finance.
“The proposed changes will safeguard the public service so civil servants can afford to live to the next fortnight,” he said.