The Australian Government has announced that it has provided a US$30 million loan to the Government of Papua New Guinea, following the US$80 million loan advanced on 21 June 2000. The Government had decided earlier this year to provide two separate loans in support of the IMFs 14 month Stand-By Arrangement, which commenced in March.
Both loans were requested by the IMF and are in support of the PNG Governments agreement with the IMF on a US$115 million Stand-By Arrangement and the World Bank on a US$90 million Structural Adjustment Loan.
Australias US$30 million loan will be disbursed in three equal tranches, linked to satisfactory completion by PNG of the first three program reviews under its Stand-By Arrangement. The first review was completed on 13 October and the PNG Government will be able to access the funds (equal to A$18.9 million) under the first tranche immediately. The Funds Executive Board is currently scheduled to complete the further program reviews in January and March 2001.
The loan contributes to the replenishment of PNGs international reserves, allows for lower PNG Government debt to the Bank of PNG, and underpins PNGs economic and governance reform efforts. In so doing, the loan also contributes to a further strengthening of investor and donor confidence in the PNG economy by providing additional assurance to financial markets that PNGs adjustment program has broad international support.
The provision of the Australian Government loans to PNG this year is recognition of the considerable gains made by PNG in the last 18 months under the leadership of Prime Minister Sir Mekere Morauta. The loans reflect the confidence the Australian Government has in the Morauta Governments commitment to further advancing Papua New Guineas important reform agenda. The US$30 million loan complements the considerable financial and technical assistance already provided by Australia to the reform program.