PNG moving away from tied loans
10/ 12/ 2017
He said the Government has learned from experience and is now negotiating loans which have better terms for the country.
He said this following the signing of a concessional loan with the Czechoslovakian EXIM Bank for K172 million (Euro 55 million) for the Boram Hospital Upgrade Project.
Abel said given the experience of the China EXIM Bank loan, which had tied conditions, the PNC-led coalition is now working to move away from such arrangements.
He said the Government is now looking more at financing arrangements, which are not tied and will also have a trickling effect on the economy.
“We want to begin a process where we want to move away from what we call tied bilateral financing. Some of the conditions that come with these loans require that a company must come from that particular country, so we’re doing our best to move away from that.
“We want as much as possible to have open tender, and to have Papua New Guinean companies participate so that more of the indirect benefits from these financing can stay in Papua New Guinea,” he said.
Another aspect of the financing arrangements being explored by the Government is concessional loans with relaxed repayment terms.
The Czech EXIM Bank loan of K172 million for the Boram Hospital is one such arrangement, he said, which has 2 percent interest and 15-year repayment period with a three grace period.
“How we improve these terms so that we have more participation from local companies is very important to us,” Abel said.
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