Treasury’s own debt plan contradicts the Treasurer’s fix

by PAUL L. KEBAIJA

Treasurer Ian Ling-Stuckey wants Papua New Guineans to believe the K2.25 billion bill due in 2028 is somebody else's mess. The 2018 sovereign bond, he told The National, was a "bad decision" that costs nearly K200 million a year and helped land PNG at "high risk of debt distress". His account collapses under scrutiny.

James Marape was Finance Minister when the US$500 million, 8.375 per cent bond was sold in September 2018, a post he held from 2012 until April 2019. If the bond was a bad decision, the current Prime Minister sat at the centre of the government that made it.

Nobody called it bad at the time. The issue was seven times oversubscribed, priced inside its 9 per cent guidance, and named best sovereign bond of 2018 by GlobalCapital Asia, an award The National itself reported. The coupon is dear against the 5.4 per cent PNG averages on its external debt, but for a debut B-rated borrower it was close to the market. Rewriting a celebrated deal as a blunder eight years later is politics, not analysis.

The maturity date was printed on the bond the day it was sold: 4 October 2028. Ling-Stuckey has run Treasury for almost all of the seven years since August 2019, the month Marape promised to refinance the "bad and expensive loans" he inherited. Treasury's 2024 debt strategy, under the Treasurer's own foreword, said the government was "actively preparing" for the maturity through a dedicated technical working group. The IMF and World Bank flagged the 2028 bullet as a liquidity risk. Two years on, the Treasurer is in Washington exploring options and complaining that the election will eat nearly a year of negotiating time. That election has been on the calendar since 2022. This is bad planning, not bad luck.

The kina cost has ballooned on this government's watch. In 2018 The National valued the bond at K1.7 billion; it now puts it at K2.25 billion, roughly K550 million more without a new dollar borrowed. Most of that is the deliberate depreciation of the kina since 2023, under the IMF programme the Treasurer now cites as his credential for cheaper refinancing.

The bond is a small slice of a larger problem: under 4 per cent of the K66 billion debt peak the Treasurer forecast for 2026, a stock that has roughly doubled since 2019. PNG's high-risk rating is the product of seven years of deficits, not one 2018 transaction. A Prime Minister who says all sovereign debt could be repaid by 2033 should not need Washington to retire one bond in 2028.

The proposed fix contradicts Treasury's own strategy. The World Bank could cover up to 95 per cent of losses on a new loan from international lenders: a commercial loan with a safety net. The 2024 strategy said commercial external financing "will no longer be considered" through to 2028. Either that commitment has been quietly dropped, or a commercial loan is being dressed up as something else. The same meeting canvassed World Bank help for State participation in Papua LNG: new borrowing, discussed alongside complaints about old borrowing.

The National ran the briefing as told: no second voice, the coupon misstated as 8.35 per cent, the maturity as August, and the IMF renamed the "International Monetary Authority".

Parliament should demand answers before the writs issue. What has the working group produced since 2024? How much of the US$500 million will be paid from cash, and how much rolled over? What conditions come with a World Bank guarantee? The bad decision Papua New Guineans are paying for was not made in 2018. It has been made every year since.