Pacific Media Watch

10 August 2015

PNG: O' Neill denies PNG on brink of 'Greek- style' economic crisis

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O' Neill claims PNG's economy is "stable" amid claims the country is facing massive debt. Image: Tim Wimborne/Archive

PORT MORESBY (PNG Loop/ Sydney Morning Herald/ Pacific Media Watch): Prime Minister Peter O’Neill has denied Papua New Guinea is facing serious debt problems and has dismissed two prominent critics he has accused of having “vested interests’’.

In a long statement, he said the country was within debt limits and that it did not have extraordinary levels of foreign debt.

In a Sydney Morning Herald report late last week, Fairfax Asia-Pacific editor John Garnaut warned Australia’s nearest neighbour could be on the “brink of a Greek-style fiscal crisis following one of the most spectacular budget blow-outs in regional history”.

Garnaut’s article said:

The projected budget deficit in Papua New Guinea’s has been revised up, hitting 9.4 per cent, which is more than double last year’s deficit and getting close to the 12.3 per cent figure which helped tip Greece into meltdown last year.

The budget implosion will come as a shock to leaders in PNG and also Australia, who have consistently played down the impact of corruption and sliding commodity prices."

But PNG Loop reports today O’Neill had claimed the PNG economy was stable, had better growth than most countries, a stable exchange rate and better foreign exchange reserves than many countries.A “fiscal crisis” graph published with the Sydney Morning Herald article.

‘Not silly’

O’Neill said the government was “not silly’’ and had kept most of its foreign loans on concessional rates.

He has provided an overview of current economic development as countries around the world “realign expectations’’ in the face of the downturn in global commodity prices.

O’Neill said critics with vested interests had latched onto a recent mid-year outlook that made projections of potential scenarios that would only eventuate if the government did not attend to global economic challenges.

“The facts are that the recent publication by the Bank of PNG indicates that the economy is stable and we are confronting global challenges,” O’Neill said.

“Inflation is at around 4 per cent. Our foreign exchange reserves have around nine months of cover. That is higher than many parts of the world where import cover is only around 3 months.

“Our exchange rates are stable. Importantly our economy continues to expand at a rate that is the envy of many countries around the world.

“We have a growth rate over 10 per cent currently that will expand to between 11 and 15 per cent by the end of the year.

‘Alarmist claims’

“Despite misinformation and alarmist claims by people with vested interests, our debt to GDP is also very stable and within the legislated cap.

“Today our debt to GDP ratio runs at around 33 per cent of GDP so is below the Financial Responsibilities Act requirement of 35 per cent.”

“Today our budget deficit to GDP ratio for the half year to June is 1.8 per cent, and we project 4.4 percent for the whole year.”PNG Prime Minister Peter O’Neill’s defence of the country’s beleagured economy after the Sydney Morning Herald report published on the front page of the PNG Post-Courier today. Image: PMC

The Prime Minister said there is no doubt that the economy is being affected by the decline in commodity prices and that is happening to countries all around the world.

O’Neill said it was important for people to properly check where the claims of doom and gloom were coming from as there are serious conflicts of interest.

“One of the leading critics is a former Australian staff member of the Treasury who was asked to leave Papua New Guinea, who also has connections to the current Opposition.

“The other is a journalist who is the son of the former chairman of the PNG Sustainable Development Programme who we asked to leave as well.”
Without naming the journalist, O’Neill was apparently referring to the Sydney Morning Herald report.

“So you can see the conflict of interest in this criticism. Reporters need to seriously verify the claims these people are uploading to the internet.”

Prime Minister O'Neill's statement


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