PNG govt insists new loan is legal

4:36 pm on 1 July 2016

Papua New Guinea's government has reportedly secured a loan of US$500 million from the multinational financial services agency Credit Suisse.

Members of the Papua New Guinea government, including Treasurer Patrick Pruaitch (centre) and Prime Minister Peter O'Neill (right)

Members of the Papua New Guinea government, including Treasurer Patrick Pruaitch (centre) and Prime Minister Peter O'Neill (right) Photo: RNZ / Johnny Blades

The newspaper, The National, reports that the loan will help the government to finance some of the deficit in the 2016 national budget.

The budget, passed by parliament in November 2015, provides for sovereign financing of approximately US$1billion to be provided by offshore investors.

According to the Treasurer Patrick Pruaitch, the new financing would be used to meet expenses such as infrastructure and development projects.

Mr Pruaitch says that all legal and procedural requirements for the loan had been met.

He says any legal challenge to the legality of the new loan will be a waste of time and taxpayers' money.

The Peter O'Neill-led government faced legal action over the way it took out a controversial US$1.2 billion state loan over two years ago.