State gets K1.5b loan

THE Government has secured a loan of US$500 million (around K1.5 billion) from an international financial institution to finance the 2016 national budget.
Treasurer Patrick Pruaitch yesterday said officials from the Department of Treasury and the Bank of Papua New Guinea “successfully negotiated and entered into an unsecured syndicated loan for up to US$500 million arranged by the leading international financial institution Credit Suisse AG”.
He said in a statement the first tranche was to be drawn down imminently.
Pruaitch assured the people that all legal and procedural requirements had been met to the letter of the law in respect of the loan “as is the case with any other loan or financing which this Government enters into”.
He said the Treasury Department had worked hard with the Bank of PNG to ensure that the Government was able to finance the budget deficit for 2016 “on the best possible terms for the State, its institutions and the people”.
“The Government has been working closely with the State Solicitor’s Office and leading international and PNG law firm, Gadens and Ashurst, to ensure that all legal requirements have been complied with and due process followed,” he said.
“The 2016 budget passed by Parliament in November 2015 expressly provides (as a source of revenue and the debt service as an expenditure) for a sovereign financing of approximately K3 billion (US$1b) to be provided by, or raised from, offshore investors.
“The proceeds of this financing, as required by the laws of PNG, will be used by the State to meet the expenses of the financing and much needed works and services of the State, including essential infrastructure and development projects.
“Any legal challenge to the legality of this loan will be a waste of time and taxpayers’ money.
“The Government respectfully requests those who threaten to undertake such malicious legal action to reconsider their motives which are obviously politically motivated and not in the best interest of PNG.
“The people of PNG should welcome the news of this loan as a necessary and successful step forward in the continued prudent and responsible management of our economy.”