11 Sep 2012

PNG opposition slams soft loan with Exim Bank of China

8:16 pm on 11 September 2012

The Papua New Guinea opposition says the Government's plan to borrow 2 point 3 billion US dollars will bring total foreign debt to nearly 7 billion dollars or 45 percent of Gross Domestic Product.

Peter O'Neill's coalition government recently agreed on terms of a loan with the Chinese state-owned Exim Bank for the rebuild of the Highlands Highway.

Under the terms, Chinese companies will be contracted to rehabilitate the country's deteriorated main road link and construct new roads.

However the newspaper, the National, reports the Opposition in a statement saying the move will lead the country to economic ruin.

The Opposition says all the gains made in the last 10 years will come to nothing.

It says the country is paying 220 million US dollars each year in interest on an existing loan and additional borrowings will substantially increase this.