At the same time that Papua New Guinea (PNG) is facing record high fiscal deficits, its government’s new annual budget shows that, by 2023, it will face a 25 percent increase in its annual debt repayments to China, an amount of US$ 67 million.
The resource rich country is among the poorest ones in Oceania. In recent years, it has been caught in the midst of the US-China diplomatic wrestling. As China’s influence continues to expand, PNG has become increasingly dependent on China. The United States warned that China’s predatory economic policy is destabilizing the Indo-Pacific region. Although the PNG’s budget does not specify the total debt owed to China, Reuters reports that China is the country’s largest creditor.
According to Reuters, in Papua New Guinea’s annual budget, the amount of its debt increased by 10 percent over the previous year, reaching 42 percent of GDP and exceeding the legal cap of 35 percent. The Australian government recently announced a preferential loan of 440 million Australian dollars (US$300 million) to support the PNG’s budget and economic development.
Source: Voice of America, November 29, 2019