Papua New Guinea asks for millions to avoid budget cliff

Port Moresby (AFP) –


Papua New Guinea has asked Australia for hundreds of millions of dollars in direct budget support, as the impoverished Melanesian nation tries to prop up shaky public finances.

Prime Minister James Marape said Monday he would like some of Australia's existing Aus$600 million a year (US $400 million) aid budget for PNG to be sent straight to government coffers.

While aid is often used to fund specific projects or channelled through Australian companies, direct budget assistance would come with fewer strings attached and could be used with more flexibility.

Marape has vowed to make Papua New Guinea the "richest black nation" on Earth, but growth has been sclerotic, making it difficult for his government to pay wages or build basic infrastructure.

Talks have begun to return to the international bond market and the government is trying to implement reforms in order to get the second part of a World Bank loan.

But Marape's government is increasingly looking to China and Australia for further help.

Both neighbours are vying for influence in a country with substantial natural resources that sits at the crossroads of the South Pacific and Southeast Asia -- giving Papua New Guinea some leverage to request money.

Marape hopes to borrow hundreds of millions of dollars from the China Development Bank and on Monday said he was looking for "any element of help" that Australia could give.

"At the moment, they are giving a headline figure of 600 million in terms of aid every year. If half of that or a quarter of that comes in budget support even better for us," he said.

The prime minister insisted government oversight would ensure the money would not be wasted or find its way into private bank accounts.

"I will be accountable (for) every dollar Australia gives," he said.