Govt eyes K1.2 billion Chinese loan

By CHRISTOPHER YANDAWAI

Negotiations to obtaining US$300 million (K1.2 billion) loan to finance the operation of the remainder of 2019 is well underway says Treasurer, Sam Basil.

Minister Basil said the loan was promised to be offered by the China Development Bank during the APEC meeting to finance the first five months of the 2019 Budget but did not eventuate.

“As a result we have entered into the domestic debt market where K491.3 million in the Treasury Bills were raised which further suspended the domestic redemption program.’’

Basil said Marape-Steven Government is only a month old and other sectorial ministers are still being briefed on their portfolios and their departments.

“In the interim, there is an urgent need in regards to 2019 Budget financing. As such, my department is in final negotiations with the China Development Bank to secure improved conditions for the promised US$300 million made at APEC,’’ said Basil.

“We are also negotiating two other loan arrangements with two International financiers and have met with international banks to re-enter the international sovereign bond market.”

Basil said so far from the negotiations, the responses are all very positive and upon confirming one, he will recommend to the National Executive Council to ascertain the planned US$300 million loan for the financing of 2019 Budget.

Minister Basil also highlighted the Treasury Department will undertake elevation of the importance and priority of discussions with the World Bank and Asian Development to secure the second tranches of their respective development policy operations.

“In this regard, I have met with the World Bank officials who are responsible for our region last week and they agreed with the approach I am taking,’’ Basil said.

Meanwhile, Minister Basil has presented on the floor of parliament the Government’s fiscal position for the first five months of 2019.

He said based on May data, net borrowing or the budget deficit as percentage of GDP was 1.6 per cent.

“This is higher than expected due to lower revenue collections from IRC, lower dividends from SOEs and lower departmental fees and charges,’’ Basil said.

He said at the end of July 2019, the budget outcomes for the first six months of 2019 will be ready as he intends to make a wider and more comprehensive statement on the execution of the 2019 Budget in the Mid-Year Economic and Fiscal Outlook (MYEFO) report.