More debt, more pain

By REBECCA KUKU
THE Government has no choice but to borrow more to add to its current debt of K31.9 billion, to, among other things, finance a K3.5 billion deficit, says Treasurer Ian Ling-Stuckey.
The House passed the 2019 Supplementary Budget he tabled last Friday, after stern warning by the Opposition of the impact on the national economy of raising the legislative limit from 35 per cent of the Gross Domestic Product, to 45 per cent.
Ling-Stuckey said they had managed to cut back the deficit from K4.6 billion to K3.5 billion but still needed to take more measures to “repair the budget and finance more growth”.
The biggest cuts were in the Treasury and Finance Department with K112m, followed by the Judiciary Services with more than K38m, and the Provincial and Local Government Affairs with more than K24m. The disciplined forces also faced cuts to their budgets while Health and Education were spared.
“We cannot rely on project financing as the Opposition suggested because it cannot finance our deficit, but we’ll continue to use the Asian Development Bank and World Bank budget support loans started by the former government,” he said.
“We will seek out other budget support from other countries so long as these are on the right terms.”
Ling-Stuckey said that they would also use the domestic market to fund the remainder of this year’s deficit.
“(The Government) decided that the right balance between repairing the budget and financing more growth opportunities is to lift the debt-to-GDP number to 45 per cent.
“There were calls to lift the ration even higher but (we) decided this must be balanced with the importance of debt sustainability.”
Ling-Stuckey maintains that “PNG must live without means”.
“This does not mean we cannot borrow. It means we must borrow well and very much in the interests of our children.”
He said there was a limit of 45 per cent on all debts “which provides capacity for borrowing”.
“At the same time, we are introducing arrangements that create a clear preference for good cheap loans led by multilaterals such as the World Bank, IMF and ABD.”