PNG govt criticised for economic mismanagement

10:44 am on 13 March 2017

Papua New Guinea's opposition leader says the country's tight fiscal situation has been worsened because its revenues are tied up with repaying cumbersome debt.

Don Polye

Don Polye Photo: SUPPLIED

Don Polye admits that the downturn in global commodity prices had hurt PNG's economy which was heavily reliant on mining, oil and gas projects.

However he said the government was irresponsible in taking out a US$1 billion loan with Swiss bank UBS in 2014 which Mr Polye claimed breached the official debt ceiling.

He said PNG's future had been tied down under this huge loan which the Prime Minister Peter O'Neill personally sanctioned without properly consulting parliament.

Mr Polye also blamed the prime minister for allowing overspending on non-vital infrastructure projects and ignoring rural development.

Papua New Guinea's Prime Minister, Peter O'Neill.

Papua New Guinea's Prime Minister, Peter O'Neill. Photo: PNG PM's office

But Mr O'Neill denies the claims, saying reports that his government was cash-strapped are baseless.

The prime minister said all public servants, teachers and health workers are getting paid, and that he was not aware of widespread complaints about people going unpaid for months.

Mr O'Neill said the government had been compelled to tighten its belt due to the commodity prices slump, hence the delivery of a supplementary budget.

However the opposition leader said all across the country there was a worsening state of basic services, and that the cash flow crisis is far deeper than the government is claiming.

"The government's poor economic management, especially the cash flow problem is the main denominator," said Mr Polye.

"Businesses and development associations can only be successful when there is sufficient cash flow. That is why our people are suffering more."

The government, Mr Polye said, must provide services like roads, water and electricity supplies to boast the agriculture industry.

"When we are in government, we will fix these problems. We know how to fix them," he said.

Meanwhile, PNG's government is pushing for all of Australia's aid to the country to be channelled directly through the national budget by 2020.

More than $US375 million is being pumped into PNG by Australian Aid annually but not in the way the PNG government wants.

The Minister of National Planning Charles Abel said PNG wanted trade not aid and it needed a mutually beneficial trade and investment partnership with Australia.

He said the PNG government had established its plans and targets and it wants Australia to work through them with PNG.