Borrowing Into a Leaking Bucket

by MICHAEL J. PASSINGAN

The Treasurer has returned from Singapore with an announcement: up to K300 million for El Niño relief, concessional, under 1.5 per cent, repayable over thirty years. On its own terms it is competent treasury work. A catastrophe drawdown option was attached to the 2025 budget support loan precisely so it could be pulled in a moment like this.

The question nobody in Waigani is asking is what the money lands in.

Two months ago the The National newspaper reported that only four provinces, East and West New Britain, Morobe and Milne Bay, hold disaster trust accounts monitored by the Finance Department. Four, out of twenty-two. The National Disaster Centre's acting director conceded capacity was a problem nationally and sub-nationally. A retired NDC officer said provincial coordinating units are short of both money and people.

That is the whole story. Relief does not reach a village because a facility exists in Singapore. It reaches a village because a provincial office has an account, a vehicle, a store, staff, and someone auditing what leaves it. In eighteen provinces at least one of those is missing. We are borrowing thirty-year money to push relief through a pipe we have not repaired.

And we know what is in the pipe. On the same day the Treasurer's announcement ran, the newspaper carried the Environment Minister demanding an investigation into K185,850 of Green Fee collections stolen, cash gone from a vehicle, a security firm owner charged, the levy itself now suspended. Nearby, an audit beginning into K200 million of SME funding. Nearby again, a feature on medicine shortages caused by budget delays. That is one edition of one newspaper.

Which brings us to the thing the Government would rather discuss less.

In February, the Financial Action Task Force placed Papua New Guinea on its grey list. The deficiencies FATF named are not obscure: weak supervision of high-risk institutions, poor suspicious transaction reporting, and unreliable information on who actually owns the companies doing business here. Read that list again and then reread the Green Fee theft, the SME audit, the missing APEC vehicles, the land transfers to ministers' associated companies. FATF has not accused us of anything Papua New Guineans did not already know. It has simply written it down where lenders can read it.

Two details deserve emphasis. First, the listing is a return PNG was under increased monitoring from 2014 to 2016 and got out. We fixed it, then let it rot. Second, the first progress report to FATF is due in September. Next month. The Government will stand before an international body and describe the controls it has built, weeks after losing K185,000 in cash out of a vehicle at the airport.

The connection is not rhetorical. Grey listing raises the friction and cost of every cross-border transaction the country makes enhanced due diligence, slower correspondent banking, more nervous counterparties. It makes borrowed money more expensive to move and harder to trace. We are taking on new debt at the precise moment our financial plumbing has been formally declared unreliable.

Three questions for Parliament. How many provinces have functioning disaster trust accounts today. What proportion of the last drought appropriation reached households, and who audited it. And what, specifically, goes in the September submission to FATF.

Concessional debt is not free. It is deferred — onto people who will be adults in 2056, in a country that borrowed to feed them and could not account for the money.