Borrowing from pensioners, calling it discipline.

By PAUL L. KEBAIJA

Nambawan Super's chief executive chose a Brisbane investment conference to say what PNG's institutions rarely say at home. The fund is urging the Government to pay the K2 billion it owes, made up of unpaid rental income and unfunded contributions affecting members who have already retired. Lachlan Baird named the people concerned: teachers and police who spent working lives in the State's service and have not received their superannuation.

The composition of that debt is the story. Of the K2 billion outstanding in unfunded liabilities, K204 million is owed directly to retired members still waiting to be paid, while more than K80 million in rental arrears remains unpaid on properties occupied by Government departments. The State is a delinquent tenant and a defaulting employer simultaneously.

So, is PNG broke? Not in the sense the word usually carries. The 2026 Budget puts expenditure at K30,913 million against revenue of K29,306 million, a deficit of 1.1 per cent of GDP, with debt-to-GDP forecast to fall from 48.4 per cent in 2025 to 45.5 per cent. The IMF's sixth review found program performance broadly on track, with all end-December 2025 quantitative performance criteria met. By the ratios the Treasurer prefers to quote, PNG is convalescing.

The ratios are not the whole ledger. Arrears do not appear in a deficit figure. A bill deferred is a bill not counted, and non-payment is the cheapest form of consolidation available to any finance ministry, unlegislated borrowing at zero interest from people with no leverage. In 2025 the Government faced the largest revenue shortfall against budget in its history, K2,173 million, and responded with expenditure cuts of at least the same amount, most of them delivered through Treasury withholding warrants rather than a supplementary budget. Warrants withheld are commitments unhonoured somewhere downstream.

Parliament has already noticed. The parliamentary committee scrutinising the 2026 Budget found overly optimistic revenue assumptions, persistent cash-flow crises and growing arrears; health centres have shut, provincial governments report receiving only a fraction of their functional grants, and in many districts basic frontline operations have stalled. That is not a solvency crisis. It is a liquidity crisis being financed by the people least able to absorb it.

Then there is the circularity, which the Government has advertised as a virtue. In 2025 alone, Nambawan Super invested K5.6 billion in Treasury Bills supporting government financing, a fact the Prime Minister cited approvingly when he welcomed the fund's results. Retirees' savings are lent to the State at interest while the State declines to remit what it already owes those same retirees. Superannuation holdings of government debt rose from 10 per cent of assets in 2010 to 40 per cent by 2019. The fund is now too entangled with its debtor to press hard.

One figure deserves an answer from Treasury. NSL's 2024 annual report recorded K1.1 billion owed in pre-reform employer contributions. The public number is now roughly double that. Either the liability has been restated, or it has grown while being described as legacy. Treasury should say which.

NSL's chairman asked in March for a clear and accelerated repayment roadmap. Five months on, the CEO was making the same request offshore. The absence of a published schedule is itself the disclosure.

PNG is not insolvent. It is a government that services bondholders promptly and pensioners eventually, and calls the difference fiscal discipline. The 2027 surplus, when it arrives, should be audited against arrears, otherwise it will be a surplus borrowed from retired schoolteachers.

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