PNG ignores Australia, asks China to refinance US$7.8 billion national debt
- Australia has traditionally been the largest aid donor and most important ally of PNG
- The request for China to refinance its debts of US$7.8 billion therefore marks a major shifts in dynamics, experts said
The request marks a “significant shift” in regional politics and PNG’s allegiances, according to Pacific experts. Australia has traditionally been the largest aid donor and most important ally of PNG, but in recent years ties between China and PNG have strengthened.
PNG’s prime minister, James Marape, visited Australia two weeks ago at the invitation of his counterpart, Scott Morrison, in his first international visit since becoming the Pacific nation’s leader at the end of May.
In a speech during his visit, Marape said he wanted PNG to move away from an “aid-donor” relationship with Australia within 10 years, and step up alongside its neighbour as a leader in the Pacific region.
However, on Tuesday, after a meeting with Xue Bing, the Chinese ambassador in Port Moresby, Marape requested that China refinance its debts of A$11.5 billion (US$7.8 billion). PNG’s debt sits at around 32.8 per cent of its GDP.
“[The prime minister] requested the ambassador to inform Beijing on a bid to assist the government of PNG refinance its existing country’s 27 billion kina debt,” Marape’s office said. “He suggested that both the Bank of PNG and [China’s] People’s Bank will take the lead with the department of treasury in ensuring that consultations are under way.”
The development underlines the changing dynamics between the three countries, said Matthew Clarke, professor of international development at Deakin University.