Public debt to rise to K11.4b

TOTAL public debt is projected to increase from K8.6532 billion in 2012 to K11.3592 billion at the end of next year as a result of the projected budget deficit for 2013.
Similarly, debt as a share of nominal gross domestic product (GDP), is projected to increase from 26% to 32% to meet the government’s development agenda.
Domestic debt at the end of 2012 is expected to be K6.221 billion, an increase of K1.101 billion or 21.5% from the previous year.
In 2013, domestic debt is projected to increase by a further K2.230 billion or 35.8%.
The domestic debt portfolio seeks to maintain a balance of short term and long term debts to reduce the refinancing risk of the portfolio while benefiting from the interest savings offered by short term debt.
At end 2012,there was a build up in the proportion of Treasury Bills within the portfolio in order to meet the shortfall in the state’s funding of the PNG LNG cash calls and other funding requirements.
In 2012, additional issuance of Treasury Bills was required to finance the expected budget deficit and Treasury Bills were expected to comprise 45.9% of the domestic debt portfolio by 2012 end – against a target portfolio range of 15 to 30%.
Over the forward estimates, the portfolio will be restructured to reduce percentage of Treasury Bills within the debit portfolio.
This will be achieved through a greater proportion of the domestic debt portfolio net issuance being of longer dated securities such as Inscribed Stock and other debt.