PNG is borrowing to survive a drought it was warned about in June

by PAUL L. KEBAIJA

On 16 July, answering Kerenga Kua in Parliament, James Marape described El Niño as "an unplanned weather that has come by." He told MPs there was no money aside from what they already had, and that they should shelve lower-priority projects and use their DSIP.

By that date, the PNG National Weather Service had already issued a drought warning citing models comparable to 1997–98 and 2015–16. Oxfam had already reported that rainfall had been below average for almost a year, that frost and pests had destroyed crops and livestock, and that up to three million people could be affected, 1.9 million in the Highlands. Allan Bird had already stood in the Grievance Debate and formally placed the government on notice, in language that anticipated almost exactly what has since happened. The 2026 Budget itself, tabled in December, discusses El Niño as a factor in world coconut oil prices. Treasury could model the drought's effect on commodity markets while the National Executive Council failed to budget a toea for its effect on Papua New Guineans.

Nothing about this was unplanned. It was unbudgeted, which is a different word describing a choice.

The response, when it came, is instructive about what the government actually had available. NEC Decision 154/2026 released K10 million per province from the Provincial Services Improvement Program and K5 million per district from the DSIP. That is not new money. It is a redirection of the most politicised funding stream in the country, handed to sitting MPs to distribute as drought relief, eleven months out from a national election. In a system where the Auditor-General has never been able to properly acquit DSIP, and where MPs' control of constituency funds is widely understood to be the currency of political survival, this is the least accountable possible channel for emergency spending. It will also be the most visible. Governor Ruffina Peter has put Central Province's requirement at K40 million and its allocation at K5.3 million, which gives some sense of the gap between the mechanism and the need.

The Supplementary Budget the Prime Minister confirmed last week is therefore not the government finally acting. It is the government conceding that the 2026 Budget's arithmetic has failed, and that it cannot fund a drought response from the fiscal position it spent nine months advertising.

Look at what the Treasurer has actually said. Ling-Stuckey met the World Bank in Singapore on 7 August and secured access to as much as K300 million in disaster financing, plus up to K80 million through the Contingent Emergency Response Component of the Rural Service Delivery Project Phase 2, on terms averaging under 1.5 per cent over up to thirty years. Concessional, yes. Cheap, yes. But borrowed. PNG's drought response is being financed by adding to a debt stock Treasury's own tables show peaking at K66.2 billion this year, in a country the Bank and Fund still rate at high risk of debt distress.

And here is the part that should worry Waigani more than the borrowing. In the same briefing, the Treasurer acknowledged that fuel subsidy costs are running high and that Kumul dividend receipts are falling short of projections. Read that against Table 1 of Budget Volume 1. The 2026 revenue forecast of K29.3 billion required 15.3 per cent revenue growth, and the largest single driver was resource dividends more than doubling from K1,471 million to K3,100 million, with Kumul Petroleum's contribution rising from K550 million to K2,100 million. That was always the load-bearing assumption. It is now publicly wobbling.

Meanwhile the drought is eating the other side of the ledger. Porgera has suspended ore processing because water levels are too low. The 2026 Budget projects mining and quarrying growth of 8.3 per cent, explicitly premised on Porgera "operating at near full capacity." The event the government failed to prepare for is simultaneously raising the spending it must do and destroying the revenue it assumed it would collect.

That is the honest shape of this crisis. Not a natural disaster striking a prudent government, but a foreseeable one striking a budget built on optimistic dividends, a currency being deliberately walked downward, and a fiscal narrative that had no room in it for bad news. The supplementary budget will be presented as responsiveness. It should be read as the first admission that the surplus promised for 2027, the centrepiece of seven years of budget repair, is not going to survive contact with the weather.

@followers
Don't forget tomorrow for your weekend series read, we stay in the southern region with another interesting character.