Former Treasurer Abel was one of the greatest loan sharks in PNG’s history. Less than a year ago he was dancing around the world, traveling first class (certainly not economy class like Prime Minister Marape!), to cripple PNG with his massive, expensive, risky $US500 million Sovereign Bond. Now he tells the country we should stop borrowing. What an economic hypocrite! What a flip flop former Treasurer! What a sad clown who demonstrates yet again why he was unAble to fix the economy.
He is the former Treasurer who warns us of how interest costs have increased to K1.3 billion a year. That is a huge amount.
But he is unAble to even remember that the actual interest costs on PNG’s massively larger debt is now K1.935 billion according to his own Final Budget Outcome (FBO) statement in March! Things are over K600 million worse every year than he is admitting.
So you knew that the debt interest burden was so much greater than you are now admitting, yet you kept on borrowing. You were such a loan shark but suddenly have shifted your tune. This sounds like a very strange song from a band of clowns. No wonder Prime Minister Marape coined the phrase “clowns of Crown”.
At least our new Prime Minister is much more balanced. He understands that there are good loans and bad loans. And he understands how bad loans on expensive terms for unproductive projects is not in our children’s interests.
As the first step to understanding the situation so we can rationally start talking about solutions, let me set out six sad facts about the painful legacy of the O’Neill regime:
- PNG’s official debt has increased from K8.5bn in 2012 to K27.0 bn in 2018 – trebling in six years.
- PNG’s debt interest costs and charges have increased from K452 million in 2012 to K1,935 million in 2018 – over a four-fold increase – an extra K1.5 billion which now has to be paid every single year.
- PNG’s debt interest costs in 2018 were larger than all expenditure on health (K1,375 million), all expenditure on law and order (K1,096 million), all expenditure on education (K600 million), all expenditure on transport (K356 million) and all expenditure on electricity and power utilities (K136 million). This is the true cost of the debt – not just breaking a debt to GDP ratio if the government didn’t use fake GDP numbers – but a loss of money available to spend on the things that really matter to the people of PNG.
- Expensive and risky foreign commercial and sovereign bond borrowings have increased from zero in 2012 to K3.3 billion in 2018 exposing PNG to major foreign currency risks.
- In addition to paying for the largest budget deficits in PNG’s history due to budget mismanagement of the booms and busts of the resource cycle and corruption, PNG has to take out new borrowings every year to simply repay the principal owed on debt. Including these debt amortization repayments, PNG’s level of new borrowings in 2018 totaled K18,009 million. I repeat, K18,009 million in 2018 alone.
- PNG’s new borrowings in 2018 were nearly K2 billion larger than total budget expenditure of K16,134 million. Extraordinarily, the O’Neill/Abel government forgot to get Parliament’s agreement to on-going high level of borrowings in the 2019 Budget Appropriation Bills.
All of these figures are based on PNG Treasury budget papers, with all 2018 figures from the latest PNG Treasury Final Budget Outcome released in March 2019 (just in case the former Prime Minister lies as he did in Parliament that I as Shadow Treasurer get my figures from Facebook).
Prime Minister Marape, please reconsider your economic team but not the ‘clowns from Crown’. The people of PNG deserve better than someone who flip flops from being a loan shark to a loan clown using the wrong figures.
Hon.Ian Ling-Stuckey, CMG.MP
Shadow Minister for Treasury & Finance
17 June 2019