NO.115

EMBARGO

AUSTRALIA PROVIDES LOAN TO PAPUA NEW GUINEA

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 IMF’s 14 month Stand-By Arrangement, which commenced in

March.

Both loans were requested by the IMF and are in support of the.png Government’s

agreement with the IMF on a US$115 million Stand-By Arrangement and the World Bank on

a US$90 million Structural Adjustment Loan.

Australia’s 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 Fund’s Executive Board is currently scheduled to complete

the further program reviews in January and March 2001.

The loan contributes to the replenishment of.png’s international reserves, allows

for lower.png Government debt to the Bank of.png, and underpins.png’s 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.png’s 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 Government’s commitment to further advancing Papua New

Guinea’s important reform agenda. The US$30 million loan complements the

considerable financial and technical assistance already provided by Australia to the

reform program.

CANBERRA

19 December 2000