PNG treasurer disputes $1.5b loan figure

PNG is engaged in financial talks with Australia but its treasurer denies seeking a $1.5bn loan.
PNG is engaged in financial talks with Australia but its treasurer denies seeking a $1.5bn loan.

Australia is speaking with Papua New Guinea about giving the nation financial support, but PNG's treasurer has hosed down reports his government wants a $1.5 billion loan.

PNG's Commerce and Industry Minister Wera Mori said on Monday his nation was seeking the hefty loan to help fund government spending.

Foreign Minister Marise Payne says that's not the case.

"The treasurer of Papua New Guinea, today, Sam Basil, clarified that the figure for starters is inaccurate," she told ABC Radio on Tuesday

Mr Basil was in Sydney for a PNG investment conference.

Despite the figure being off, Senator Payne said Australia is speaking with its regional neighbour about its finances, stressing there's nothing new about that.

"We have been working with Papua New Guinea on economic reform and financing needs, frankly, over many years."

She expects the issue will be canvassed at a ministerial forum for Australia and PNG in Port Moresby on Monday.

"There's not a figure to put on it, at this point in time in discussions, but it is an important discussion in which Australia is engaged."

Mr Mori's unusual request came just weeks after PNG approached China to refinance its entire national debt.

Australia already gives PNG about $600 million a year in development aid, but has rejected previous requests for direct budget support.

However, with Australia trying to suppress growing Chinese influence in the Pacific, the Morrison government will need to carefully weigh the request.

Liberal MP Katie Allen, who was in PNG last week to look at how Australian aid money is spent, is open to the idea of offering the Pacific nation a direct loan.

Australia usually prefers to provide aid for health and education programs.

But Dr Allen, a first-term MP and former medical researcher, talked up the importance of developing the relationship with Australia's nearest neighbour.

"In some ways it's a border buffer, it's an incredibly close partner to ours, and we have strong and close alliances with them but we need to increase these," she said.

Acting Labor leader Richard Marles said the government would need to consider the request very carefully.

"That is a very big request that's been made by PNG - it's not something that Australia has done for some time," he told ABC Radio National.

Both Dr Allen and Mr Marles cautioned against taking a "fundamentalist" approach to delivering development assistance.

"It's important we take each request on its merits and give it due consideration," Mr Marles said.

Mr Mori has hinted he will ask China for support if Australia turns him down.

But Mr Marles is reluctant to view the latest request as a contest between Beijing and Canberra for strategic dominance in the Pacific.

"We need to be focusing on the Pacific on its own terms - we can't be there because we don't want somebody else to be there," he said.

Australian Associated Press