10 Oct 2002

World Bank and IMF will assist PNG out of its economic woes

11:27 am on 10 October 2002

The World Bank and International Monetary Fund have agreed to provide limited assistance to Papua New Guinea to ease its economic woes but not to fund the government's budget.

Sources within the Treasury Ministry say that the World Bank will provide technical and development assistance and the IMF will finance a deficit in PNG's balance of payments by augmenting the country's reserve in foreign currency.

Their aid falls short of a request from the Treasurer, Bart Philemon for 70.1 million US dollars to partly bridge an expected budget deficit of 119 million dollars.

This comes after Mr Philemon recently met with World Bank and IMF officials in Washington.

Treasury sources say there's reluctance from the World Bank to lend PNG funds as it is concerned about the lack of expenditure control and transparency in how funds are spent.

They say if the World Bank does not lend PNG the Budget funds, the government will be have to find the money from other sources.

The PNG government is currently negotiating with the Australian government to redirect 20 million dollars of Australian aid to the 2003 budget.