State debt is K51bil, says BPNG

THE country’s total debt at the end of June was K51billion, which is expected to increase to K54 billion by the end of the year, according to the Bank of Papua New Guinea.
The K54 billion at the end of 2022 is around 53 per cent of the Gross Domestic Product (GDP).
According to the bank’s monetary policy statement:

• AT the end of June, the debt level was K51 billion (K50,568.1 million), compared to K43 billion (K43,238 million) at the same period last year
• THE K51 billion is made up K27.8 billion in domestic debt, and K22.7 billion in external debt;
• BY the end of the year, total debt is projected to increase to K54 billion (K54,157.8 million)– 53 per cent of the country’s GDP; and,
• FOR this year alone, the Government is expected to make a debt repayment, including interest of K4.09 billion, representing 18.5 per cent of total Government expenditure.

Bank of Papua New Guinea acting governor Benny Popoitai said the increase in the debt level over the years had resulted in the higher debt service payments.
“This is a major expenditure item in the Government’s budget and is an opportunity cost to providing services to the people,” Popoitai said.
“While debt increased significantly over recent years, majority of foreign debt is concessional with low interest rates and long-term maturities.
“This implies that the burden of debt repayment is shifted to future period at the expense of future generations.
“Therefore, any new borrowings should be put to productive use to grow the economy, especially the non-mineral export sector to increase the Government revenue base and foreign exchange earnings to repay future loan obligations.
“The Government should seriously consider net retirement of some debt from windfall tax revenue and reduce budget deficit to ensure that debt level is sustainable to achieve fiscal consolidation in the medium term.”
The central bank of Papua New Guinea has a core mandate to ensure price stability and maintain macroeconomic growth.