IMF arrives in PNG

DESPITE some big falls in commodity prices this year, the government’s planned review of mining and petroleum taxes may not be off the cards.
IMF arrives in PNG IMF arrives in PNG IMF arrives in PNG IMF arrives in PNG IMF arrives in PNG

Technical officers from the International Monetary Fund are in Papua New Guinea, with the government previously saying the IMF would provide technical assistance to a review on the country's mining and petroleum taxation.

However, the Post-Courier reported that the IMF would provide assistance to the establishment of the country's PNG LNG project revenue-based sovereign wealth fund and over the establishment of Kumul Holdings.

IMF spokesman Michael Pappaioannou told the newspaper that the findings from the trip would go into a report that will advise the government on what will be "profitable".

"We are focusing on two issues - the government structure and the investment management of the sovereign wealth fund," he reportedly said.

The government structure is a possible reference to the plans to restructure state-owned assets, which includes disbanding Petromin PNG Holdings.

Cabinet has proposed transferring all state assets into new Kumul-themed entities, including Kumul Mining, Kumul Petroleum and Kumul Holdings for the non-mining and petroleum assets.

Bills over this and the formation of the overarching Kumul Trust, which is proposed to have Papua New Guinean Prime Minister Peter O'Neill as trustee and former PMs as shareholders, are expected to be tabled in Parliament in September.

Institute of National Affairs PNG executive director Paul Barker previously expressed concern that the Kumul Trust might end up in charge of the proposed sovereign wealth fund.

"The Kumul Trust should certainly not be managing the sovereign wealth fund and I think that's what some people have in mind - the management of Kumul Holdings would have a say in the board and administration of the sovereign wealth fund," he told in June.

"That would severely run against the governance criteria that are essential for the sovereign wealth fund to have credibility and to perform."

The IMF previously said the PNG resources sector could make a larger contribution to public revenues.

"Efforts to promote this could include strengthening revenue collection, reinforcing the internal revenue and customs services, streamlining existing tax concessions and applying the additional profits tax to mining activities, given that the average effective tax take from resources appears to be on the low side of fiscal regimes across the world," the IMF said in a report on PNG published last year.

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