LING STUCKY LOOKS PRETTY WITH THE BOOKS, THE COUNTRY HOWEVER DOES NOT

by PAUL L. KEBAIJA

Ian Ling-Stuckey's 2026 Budget is a document of considerable self-regard. K30.91 billion in spending, K29.3 billion in revenue, a deficit of K1.6 billion or 1.1 per cent of GDP, and a debt-to-GDP ratio the Treasurer says will fall from 48.4 per cent in 2025 to 45.5 per cent this year and 42 per cent in 2027. Seven consecutive record budgets. A promised surplus in 2027. Full repayment by 2034.

Now look at who actually holds the paper. The World Bank puts PNG's total external debt at about US$12.9 billion, of which roughly US$7.3 billion is public or publicly guaranteed. The IMF has disbursed close to US$1 billion since March 2023 across the Extended Credit Facility, Extended Fund Facility and Resilience and Sustainability Facility, the last tranche of US$163 million cleared by the Board in June. The ADB has committed US$5.4 billion to PNG over its history, currently runs an active portfolio of 20 loans and two grants worth US$1.51 billion, and has flagged another US$1.2 billion over three years. The EU remains largely a grant partner, with €177 million committed for 2021–27, though the EIB has now written its first concessional sovereign loan here, €25 million for urban water. And beneath all of it sits the US$500 million Eurobond issued in 2018, a bullet repayment falling due in 2028, which the Bank and Fund have repeatedly named as the single sharpest risk in the debt profile.

Two things follow. First, the improvement is arithmetic, not achievement: PNG's ratios fall because nominal GDP grows and because concessional lenders keep refinancing the state at rates no market would offer. Strip out the Fund and the banks and the story is a government that cannot fund itself. Second, PNG remains rated at high risk of debt distress with weak debt-carrying capacity. That rating has not moved.

The revenue side is where the government's credibility should be tested hardest. The 2025 Final Budget Outcome recorded a revenue shortfall of K2,173 million against budget, which the Treasurer himself conceded was the largest in PNG's history, worse than 2020. A government that misses its own forecast by that margin and then projects a surplus twelve months out is asking to be believed on trust. Meanwhile the same administration has chosen to stabilise domestic fuel prices at pre-shock March 2026 levels and compensate importers for the difference, a subsidy in everything but name, layered onto GST relief extended through the year. Election-adjacent spending has a way of arriving early in PNG.

Then February happened. The FATF placed PNG on its grey list on 13 February 2026, citing weaknesses in money laundering investigation, asset confiscation, supervision of non-financial businesses, and beneficial ownership transparency. This is a return, not a debut: PNG was listed once before, from 2014 to 2016. Marape's response has been to point at ICAC's arrests and at the K54.1 million allocated to the Commission in 2026. That is roughly two per cent of the K2.499 billion law and justice envelope, for the one agency the FATF is effectively grading. It is not a serious number, and the Commission's own leadership disputes through 2025 and 2026 suggest the institution is still being contested rather than backed.

And the weather does not negotiate. The National Weather Service has confirmed a strong El Niño projected to persist into early 2027, with Oxfam estimating up to three million people affected and 1.9 million in the Highlands. The 1997 comparison is the one that matters: deaths clustered not by province but by remoteness and cashlessness.

So the sequence for 2027 is a national election, a drought at its peak, a grey-listed financial system, and a US$500 million bullet a year later. The budget repair narrative was never wrong. It was just never the whole ledger, and Pangu has spent seven budgets betting nobody would read the rest of it.

@everyone