At the request of the Government ofPapua New Guinea (PNG), a mission comprised of Jeff Chelsky(PRMVP, mission lead), Tomas Magnusson (BDM, consultant),Greg Horman (BDM, consultant) and Tim Bulman (EAP, countryeconomist), visited Port Moresby between November 22nd andDecember 3rd to undertake a DeMPA exercise. The team metwith officials from the Department of Treasury, Bank ofPapua New Guinea, Department of Finance, Department ofNational Planning and Monitoring, State Solicitor'sOffice, Auditor General's Office, Independent PublicBusiness Corporation (IPBC), AUSAid, Asian Development Bank,ANZ Bank, Nambawan Super, and Bank South Pacific (BSP). Thisreport reflects comments received from the PNG authoritiesin February 2011. The mission found that, in a number ofareas, PNG meets or exceeds minimum DeMPA requirements.Strengths include the quality of the debt managementstrategy, the framework for domestic debt issuance,coordination with monetary policy, and the legal framework(except for the issuance of T-bills for which the lawcontains no explicit borrowing purposes).Looking ahead,the Government has expressed its intention, as part of the2011 budget and its updated 2011 Medium-term Debt ManagementStrategy, to remove the nominal cap on external debt,replacing it with a cap of 30 percent of Gross DomesticProduct, or GDP. The commitment to allocate a portion ofexcess government revenue to debt reduction will only applywhen the debt-to-GDP ratio exceeds 30 percent of GDP. At thesame time, the Government has reiterated its commitment toreducing the exchange rate risks to its debt portfolio bytargeting 40 percent of total debt over the medium term forthe external portion of the portfolio. Interest rate riskwill be reduced through continued efforts to extend thematurity of domestic debt.
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