IMF potential cash crisis saviour, says PNG opposition

PAPUA NEW GUINEA’S leader of the opposition, Don Polye, has called for the National Government to seek financial assistance from the International Monetary Fund. In the short-term, he said, this will prop up revenue shortfalls prompted by the global collapse in oil and gas prices, allowing public servants to be paid and basic services reinstated.
IMF potential cash crisis saviour, says PNG opposition IMF potential cash crisis saviour, says PNG opposition IMF potential cash crisis saviour, says PNG opposition IMF potential cash crisis saviour, says PNG opposition IMF potential cash crisis saviour, says PNG opposition

With over 112,000 public servants, the Government is PNG's largest employer, and it isn't only Mr Polye who is concerned about their wages not being paid.

The Council of Public Sector Unions have said they continue to be "inundated" with calls from public sector employees, whose billed liability at the start of 2016 sat at nearly US$99 million, with millions further owed in superannuation contributions. The latest public sector workers to feel the pinch are those employed by the National Broadcasting Corporation (NBC).

The opposition leader recently told Australia's ABC radio program, Pacific Beat, that several sitting government and opposition members of parliament had shortfalls in their salaries, as well as at least four ministers.

According to CPSU chair Emma Faiteli, teachers are not in the classroom, and police not on the job as they are at ATMs and banks, trying to see if their pay has been processed. This, says Ms Faiteli, adds up to a national emergency, with far reaching repercussions of social and economic disorder likely if the pay crisis continued.

PNG's public debt is set to treble from 2012 to 2016 to sit at 56 percent of GDP, if debt owed by state-owned enterprise, loans from investment bank UBS for PNG's 10 percent stake in gas and oil company Oil Search, and superannuation arrears are taken into account, says the Lowy Institute's Jonathan Pryke. Add into this the IMF's estimate of nearly AUD$1.4 billion needed for infrastructure, entertainment and security at the upcoming 2018 APEC Leaders' Summit in 2018, and the cash flow crisis looks more like a flood.

Paul Flanagan, an Australian economist specialising in PNG, said Mr Polye's talk of seeking help from the IMF is "probably a good initiative", as they are a good source of cheap finance.

"The IMF is actually reasonably cheap finance to assist with these types of transitions. It's certainly what PNG did in the mid-nineties and also late nineties to deal with similar economic challenges that they faced then. So that's probably a good initiative to go and look for some of these cheap sources of finance and advice."

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