Pa­pua New Guinea Debt Cri­sis: PM Ac­cused of Veer­ing Be­tween Aus­tralia and China

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Pa­pua New Guinea’s former Prime Min­is­ter Peter O’Neill has hit out at his suc­ces­sor, say­ing he was “tak­ing PNG back­wards” and con­demn­ing him for al­legedly flip-flop­ping on ask­ing Aus­tralia and China for as­sis­tance with PNG’s debt. Mr O’Neill’s at­tack on James Marape came af­ter he was ousted from the gov­ern­ment benches by Mr Marape on Tues­day. Mr Marape asked Mr O’Neill’s party to join the Op­po­si­tion be­cause of the party’s “neg­a­tive in­flu­ence” and due to its “at­tempts to un­der­mine this gov­ern­ment”, the lat­est in­stance of po­lit­i­cal tu­mult in the coun­try. The former PM is­sued a state­ment con­demn­ing Mr Marape’s ac­tions since he took of­fice at the end of May, re­plac­ing Mr O’Neill as a leader, say­ing he was de­rail­ing all the hard work he had done in the past eight years.

“Apart from the at­trac­tive rhetoric, we have seen no solid poli­cies and pro­grams so far,” said Mr O’Neill in a state­ment re­ported by me­dia in PNG.

Mr O’Neill sin­gled out Marape’s han­dling of re­quests from Aus­tralia and China to as­sist with PNG’s debt, which sits at about 32.8 per cent of its gross do­mes­tic prod­uct. “The Prime Min­is­ter is re­ported court­ing the Aus­tralians, then the Chi­nese and the Aus­tralians again. This does not hap­pen in to­day’s for­eign re­la­tions,” he said. “De­spite all the rhetoric about tak­ing PNG back, we see no ev­i­dence of this hap­pen­ing be­yond the words. With each ac­tion we seem to be tak­ing PNG back­wards.”


Con­fu­sion sur­rounds PNG’s debt strat­egy. Ear­lier this month, Mr Marape asked China to re­fi­nance its en­tire gov­ern­ment debt of A$11.8bn (27bn kina, or US$7.95bn), ac­cord­ing to a state­ment is­sued by his of­fice and seen by the Guardian.

The next day, Mr Marape dis­puted the news, send­ing out a new state­ment say­ing that “we as whole of gov­ern­ment have not ap­proved this path­way yet, and some­one has run ahead to the me­dia with­out my con­sent or knowl­edge.”

“It has come to my knowl­edge that a pur­ported press re­lease from my of­fice on re­quest for China-based fi­nanc­ing fa­cil­i­ties to re­fi­nance heavy and ex­pen­sive debts up to 27bn kina the O’Neill-led gov­ern­ment has racked up,” said the sec­ond state­ment.

PNG seeks as­sis­tance

Mr Marape added that PNG would seek as­sis­tance from many part­ners, in­clud­ing the World Bank and “some other pos­si­ble non­tra­di­tional part­ners”.

On Mon­day, ahead of a meet­ing with for­eign min­is­ter Marise Payne, Mr Marape said he would like some of Aus­tralia’s ex­ist­ing A$600m a year (US$400m) aid bud­get for PNG to be sent straight to gov­ern­ment cof­fers.

Aus­tralia re­fused the re­quest, but said the gov­ern­ment was open to help­ing PNG with its debt, but would not do so out of the ex­ist­ing aid pro­gramme.

Pa­pua New Guinea Prime Min­is­ter James Marape.

Former Pa­pua New Guinea Prime Min­is­ter Peter O’Neill.

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