12 Jun 2014

PNG PM defends debt levels after Moody's comment

4:15 pm on 12 June 2014

Papua New Guinea's Prime Minister Peter O'Neill has responded to criticism from Moody's ratings agency of his government's rising debt levels.

Moody's last week confirmed PNG's sovereign rating at B1 and noted the "transformational" nature of the country's landmark Liquefied Natural Gas project.

The project has commenced production in the last month and is expected to underpin economic growth exceeding 20 per cent in 2015.

However the agency also warned that "a marked deterioration in fiscal and debt metrics over the past two years" could threaten a downgrade.

The newspaper, The Australian, reports Mr O'Neill has defended his Government's handling of the economy, including some controversial loan facilities that have recently been taken out.

Mr O'Neill says they are borrowing to ensure the delivery of vital services, including education and health, which have been poorly resourced for many years in PNG.