Transparency crucial for SWF’s success, says Ian Tarutia

News that matter in Papua New Guinea

Transparency crucial for SWF’s success, says Ian Tarutia

PORT MORESBY: The Association of Superannuation Funds of Papua New Guinea (PNG) supports the Institute of National Affairs (INA)’s call for the Government to clarify the functions of its Sovereign Wealth Fund (SWF).

“(We agree) the formula to be applied for its administration and for independent fund management to be in place, upholding the Santiago principles, needs clarification,” association president Ian Tarutia said.

Reading the following earlier reports for context:

https://pngcybermonitor.blogspot.com/2022/11/clarity-sought-for-papua-new-guineas-swf.html (Clarity sought for Papua New Guinea’s SWF)

https://pngcybermonitor.blogspot.com/2022/11/maiden-k56m-deposit-for-papua-new.html (Maiden K5.6m deposit for Papua New Guinea’s SWF)

The importance of transparency (Santiago principle) in managing PNG’s SWF was reported by The National:

Funds support call for Govt to clarify SWF functions

November 17, 2022The NationalNational

THE Association of Superannuation Funds of Papua New Guinea supports the Institute of National Affairs (INA)’s call for the Government to clarify the functions of Papua New Guinea (PNG)’s Sovereign Wealth Fund (SWF).
“(We agree) the formula to be applied for its administration and for independent fund management to be in place, upholding the Santiago principles, needs clarification,” association president Ian Tarutia said.
He said since the Organic Law on the SWF 2015 was enacted, successive governments had not put in place the mechanism and operational requirements of the fund through a relevant Act of Parliament to complement the Organic Law.
In supporting the media statement by INA executive director Paul Barker, Tarutia said it was encouraging to see that the Government had deposited K5.6 million to the SWF, which was 7 per cent of the K80 million consolidated revenue paid by the state-owned Kumul Consolidated Holdings.
“However, whilst we welcome the Government’s move to kick-start the SWF, we are somewhat concerned that there is no mechanism in place to administer and operate the fund.
“It is important that the Government establish the board, and secretariat structure that will administer and operate the SWF according to global best practices.
“This will also ensure the funds are fully secured from political interference and abuse.
“We understand the Organic Law requires 50 per cent of mining and petroleum tax revenues and 75 per cent of dividends returned to Government to be deposited into the stabilisation fund.
“In each fiscal year, a portion of these funds can be used as revenue, based on a legislated formula.
“The savings fund also has its own requirements for deposit and one would have appreciated compliance with the law in calculating the deposits into either the stabilisation fund or the savings fund.”

Papua New Guinea (PNG)’s Sovereign Wealth Fund (SWF)

November 17, 2022The NationalNational

According to the Organic Law on the SWF:

  • THE SWF consists of the Stabilisation Fund and the Development Fund;
  • OBJECTIVES are to support macroeconomic stabilisation, development objectives of the Government including long-term economic and social development and asset management in relation to assets accrued from natural resource revenue.
  • SWF belongs to the Independent State of Papua New Guinea;
  • TREASURY Minister determines the investment mandate in accordance with the Organic Law, receive and consider reports from the Board to ensure it complies with the Organic Law;
  • THE minister shall, after consultation with the Board, give to the Board a written investment mandate in respect of the performance of its investment functions;
  • THE Stabilisation Fund shall manage the impact of fluctuation mineral and petroleum revenues in the PNG economy and the National Budget;
  • ALL mineral and petroleum revenues, earnings from investment of mineral and petroleum revenues, such other amounts as the Government contributes, are to be paid into the Stabilisation Fund;
  • WITHDRAWALS from the Stabilisation Fund shall be through the National Budget and shall not exceed the 15 years long-term moving average of mineral and petroleum revenues as a share of non-mining revenue.

An Act of Parliament may make further provisions not inconsistent with the Organic Law for withdrawals; and,

  • THE Board shall consist of six members from the private sector, one of which shall be Chairman and the department head responsible for treasury matter, ex officio.
    All to be appointed by the Head of State, acting with and in accordance with, the advice of the SWF Appointments Committee which consists of the Prime Minister (Chairman), Opposition Leader, Governor of the Bank of Papua New Guinea, Auditor-General and the Head of the PNG Chamber of Commerce and Industry.

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