Clarity sought for Papua New Guinea’s SWF

News that matter in Papua New Guinea

Clarity sought for Papua New Guinea’s SWF

PORT MORESBY: The Government should clarify the functions of Papua New Guinea’s Sovereign Wealth Fund (SWF) and the formula to be applied for its administration, Institute of National Affairs executive director Paul Barker says.

“The maiden injection of funds into the SWF is valuable and would start the process, as long as the required transparency mechanisms are in place,” he added.

Barker said it was important to have clarification on the functions and the formula to be applied for the administration of the fund, to have full public awareness of the SWFs role (and its asset to help safeguard its future) and to have independent fund management, with constant disclosure of investments and returns.

The news break was published by The National:

Clarity sought on wealth fund

November 15, 2022The NationalMain Stories

THE Government should clarify the functions of Papua New Guinea’s Sovereign Wealth Fund (SWF), and the formula to be applied for its administration, an economist says.
Institute of National Affairs executive director Paul Barker said the launching of the SWF was valuable and would start the process, “as long as the required transparency mechanisms are in place”.
“It’s important to have clarification on the functions and the formula to be applied for the administration of the fund, to have full public awareness of the funds role (and as their asset, to help safeguard its future) and to have independent fund management, with constant disclosure of investments and returns,” Barker said.
Last week, the first K5.6 million was deposited into the SWF — being seven per cent of the K80 million consolidated revenue paid by the Kumul Consolidated Holdings (KCH) to the Government.
“It is critical that the fund is in place as resource rentals start to increase, and to be able to capture them for the stabilisation, equalisation and investment functions,” he said.
“A good way to kick off the fund much more substantially, would be to move out of the current model of state equity in the domestic resource projects, and to sell off much of the share holdings in the current gas and mineral projects, held by Kumul Petroleum Holdings Ltd and Kumul Minerals Holdings Ltd and transfer the proceeds to the SWF.”
He said they could be invested in diverse government bonds and equity, “reducing the commodity-based fluctuations and risks from our own resource projects”.
“But with the SWF, it is critical that PNG adheres to the highest standards of the Santiago principles (for such funds), which enables them to be well managed and transparently managed, to enable them to perform their functions in a reliable manner, and outside the interfering hands of vested interests,” he said.

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