Support for establishment of Sovereign Wealth Fund

Business, Normal

The National, Friday June 12th, 2015

 A RESEARCH Fellow with the Australia National University says the early establishment of the Sovereign Wealth Fund will be good for Papua New Guinea.

Matthew Dornan, a fellow at the Development Policy Centre, said the US$19 billion (K50.3bn) PNG LNG project was the mineral wealth of the country and its people.

He said the money should be set aside for future investments.

“The Government had passed the organic law to establish the sovereign wealth fund and subsequently we couldn’t pass it because we had a minor error, basically used it as an excuse to de-establish the fund. 

“To my knowledge, the Sovereign Wealth Fund is yet to be established,” Dornan said. Institute of National Affairs executive director Paul Barker had previously said the country’s high level of debt would greatly affect functions of SWF 

for some time after it was established.

Barker said public debt had risen massively in recent years.  

“The problem of course, is that with the level of debt that the State has been accumulating, and associated interest payment obligations, the capacity of the SWF to perform its stabilisation and savings functions will be severely limited for some time,” he swaid.

Barker said public debt had risen by K3.5 billion from K11.9 billion at end of 2013 to K15.5 billion at end of 2014, according to the provisional final budget outcome report from the Treasury.

He said given that another deficit had been budgeted this year, and with prices of PNG’s main export commodities including LNG generally low, it was critical that the Government applied fiscal prudence and did things sooner than later.