Commentary by Phil Senginawa
PNG
Facebook population is inundated with semi-literate commentators. People need
to understand the difference between Aid/Grants and Soft/Concessional Loans.
We can complain and complain till the pigs fly regardless
of whatever government is in charge. PNG currently owes China US$634 million
(PGK2.12 billion) in soft loan and its insignificant, can be repayable after a
brief period whereas Sri Lanka owes China US$64 billion in Loans which is
nearly 90% of their GDP.
Countries
and Multi-National Corporations rely on loans to pursue their development
Agenda. Unless if you have huge financial reserves or substantial sovereign
wealth fund to finance your infrastructure developments.
With
a narrow economic base like PNG, financing for development is not an easy task.
It needs economic diversification and monetary policy realignment.
If
advanced economies are not getting loans from international and regional
financial institutions, they're issuing treasury bonds domestically and that is
a form of domestic loan. Almost all countries are indebted domestically or
internationally and they have fiscal deficits anyhow.
If
western powers are influencing developing countries not to acquire loans from
China then where should they get loans to fund their infrastructure
developments, should they stick to IMF and World Bank where they pay annual
membership fees to be eligible to get loans that comes with strict conditions
and high interest repayments?
China's
loans are flexible, however all PNG needs is to strengthen its governance
structure against the possible corrupt dealings that comes with the loans. Also
be firm on the Terms of Reference and ensure 50/50 benefits to PNG private sector.
Used with permission from https://www.facebook.com/pg/pngbreakingnews