Posted By Staff Reporter
MOODY’S Investors Service last week upgraded the outlook on the government rating to “stable” from “negative”. It attributes the change of the outlook to stable “by a stabilisation in the Government’s debt burden arising in part from the positive terms of trade shock from higher global prices for Papua New Guinea’s commodity exports”. It is also a result of a “renewed commitment to long-term fiscal sustainability that has been reinforced by its re-engagement with development partners”. “Moody’s now expects a stable debt burden and debt affordability in the next few years,” a statement said. “In addition, government liquidity and external vulnerability risks have ebbed given improvements in domestic funding conditions and the balance of payments, leading to lower domestic interest rates and higher foreign exchange reserves, respectively, which Moody’s expects to continue. The affirmation of the B2 rating reflects the confluence of relatively weak economic strength, institutions and governance strength, and susceptibility to event risk. “Nonetheless, progress on large resource projects, particularly for liquefied natural gas (LNG), improve the outlook for medium-term growth and fiscal repair, while the re-election of the Government of Prime Minister James Marape allows for policy continuity and no meaningful deviation from the negotiations already conducted with regards to the large resource projects or with development partners and the International Monetary Fund (IMF).”
Treasurer Ian Ling-Stuckey, in welcoming the change in rating by Moody’s, said PNG had demonstrated progress on reforms, “including its performance under successive IMF staff monitored programmes over the past two years, reflects a renewed emphasis on engagement with the international community”. Ling-Stuckey said the Government was negotiating another programme through the IMF’s extended credit facility that was expected to start next year. “The shift towards more concessional funding sources and away from the PNG’s traditional reliance on domestic market-based financing will lower debt servicing costs and debt affordability, as well as bolster external stability,” he said. PNG Economy Watch Next : PNG Superfund Looks To Mitigate Challenges On Its Investments Comments are closed.
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