World Bank happy with PNG debt

THE World Bank has reiterated that Pacific Islands countries including Papua New Guinea must ensure debt sustainability by improving debt management, quality of spending and building fiscal space.
Country economist Ilyas Sarsenov was commenting on the World Banks’ East Asia and Pacific Economic Update report.
Sarsenov said PNG’s medium-term debt management strategy was good.
“So overall in the Pacific region, debt is a concern and unlike in PNG, where the level of debt is relatively moderate, in other smaller islands debt is much higher. Therefore, there is a general concern.
“There is a bilateral programme in terms of understanding but also bringing the debt to a more sustainable level and sustainability may be impacted again from the three financial risks.”
These include the financial risk, interest rate risks and foreign exchange risks. “If the nature of debt is so strong then the government is struggling to refinance those debts,” Sarsenov said.
“If the interest rates are higher than it used to be, then finding a more concessional and lower level interest that would be benefited for addressing the sustainability.
“Foreign exchange risks, if there is a devaluation then certainly, pressure on the government on service of the debt.”
He said those risks were being monitored and should be assessed as part of the debt sustainability framework.