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Papua New Guinea's Government says it wants $1.5 billion (US$1 billion) from Australia to help finance its 2019 budget, including funding to help fight corruption and to pay for roads in remote areas.
PNG's Commerce and Industry Minister Wera Mori has told PM that the request for direct budget support from Australia was “quite significant”.
“The new government has realised that we are in a situation which we need to basically come out of,” he said.
“This will go basically towards helping us to cushion the current situation we are in so we can meet complete funding of the 2019 budget to deliver services to the people.”
Mori is part of a delegation of senior PNG ministers in Australia to attend a Papua New Guinea investment conference in Sydney.
The country's Treasurer Sam Basil accompanied Australia's Foreign Minister senator Marise Payne to Canberra for talks after they attended the opening of the conference.
PNG is already seeking international help to refinance nearly $12 billion (US$8 billion) in national debt. However, earlier this month PNG Prime Minister James Marape denied reports that he had asked for China's assistance.
The PNG request comes as Australia tries to claw back some of China's growing influence in the Pacific and as Pacific leaders step up their attacks on the Australia Government over climate change.
In July this year, Marape set the goal of moving away from an "aid-donor recipient relationship" with Australia.
Mori said any direct budget assistance from Australia would not be used to pay foreign debt.
“I'm not aware of any conditions raised by the Australian Government,” he said.
“We need to bring in important structural adjustments so that we are able to basically fund our programmes, but they must be outlined in such a way that there's a return for the money Australia gives us.”
Australia is the biggest aid donor to PNG with $607.5 million (US$410 million) in official development assistance granted in 2019-20.
Lowy Institute research fellow Shane McLeod said Australia had not given direct budget assistance to PNG for about 20 years.
“This is something PNG would sincerely like assistance with to get its budget restructured,” he said.
McLeod said the size of the country's foreign debt was around one-third of PNG's gross domestic product (GDP).
“If PNG could get on top of that, perhaps restructure that debt, it means it could get its expenditure on interest under control and that could help the overall budget picture,” he said.
“Australia traditionally for the past 20 years or so hasn't done direct budget support and has directed this sort of work through the international agencies, primarily the IMF [International Monetary Fund].”
Speaking to the ABC on the sidelines of the conference, Senator Payne downplayed comments by Deputy Prime Minister Michael McCormack that Pacific nations would survive climate change because they could come to Australia to pick fruit under the seasonal workers programme.
“Well I think you need to read the entire context of his contribution, he's obviously speaking in the context of agricultural engagement, as you might expect the leader of the National Party to do,” Senator Payne said.
Mori also played down McCormack's comments.
“I am pretty sure we shouldn't be reading much into what basically he said,” Mori said.
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