This Statement relates to the Loan Agreement between the Commonwealth of Australia and the Independent State of Papua New Guinea (PNG) for A$650 million, signed on 10 December 2021.
This loan is provided in response to a request from the PNG Prime Minister, Mr James Marape, to provide support to PNG to meet its 2021 Budget financing shortfall, help it respond to the ongoing health and economic impact of the COVID‑19 pandemic, and continue progress on economic reforms under the second International Monetary Fund Staff‑Monitored Program.
Background and history
PNG has experienced significant economic challenges since the onset of the COVID‑19 pandemic, which has led to an increased financing need in its budgets. In 2020, Australia provided a bilateral loan to PNG to support PNG’s deteriorating fiscal position. As the effects from COVID‑19 have dragged on, PNG continues to have significant economic vulnerabilities, exacerbated by the pressures of the pandemic.
Australia and PNG are sovereign partners who share unique and enduring connections underpinned by a special bilateral relationship including the Comprehensive Strategic and Economic Partnership. It is in Australia’s interests to have an economically stable partner with sustainable fiscal management.
Further information on Australia’s partnership with Papua New Guinea can be found on the Department of Foreign Affairs and Trade website.
This Statement is being tabled pursuant to the requirements of sections 8D‑8E of the International Monetary Agreements Act 1947 (IMA Act). Under the IMA Act, the Treasurer is required to release and table in the Parliament a statement that describes the nature and terms of an agreement entered into by Australia to provide financial assistance to another country, and that details why such an agreement is in Australia's national interest.