Why Papua New Guinea’s SWF lacks transparency

News that matter in Papua New Guinea

Why Papua New Guinea’s SWF lacks transparency

PORT MORESBY: Finance Secretary Dr Ken Ngangan says Papua New Guinea (PNG)’s Sovereign Wealth Fund (SWF) has specific requirements for deposits into and withdrawals from the stabilisation fund to support the national budget.

“The Government has been transparent in its establishment of SWF as published in the budget books each year,” he said in response to reports in The National claiming a lack of transparency in the functioning of the SWF.

He said the fund was managed strictly in accordance with an Organic Law under the governance of a board.

Ngangan went on with many words but no answers to the following:

Ø # HAS the board been set up according to the Organic Law? Who are the members and where is the secretariat;

Ø # THE Government made a maiden deposit of 5.6 million into the SWF after six years on Nov 10, 2022. The deposit was seven per cent of K80 million paid by Kumul Consolidated Holdings as dividend to the State; However, Association of Superannuation Funds of PNG president Ian Tarutia said it was understood that the Organic Law required 50% of the mining and petroleum tax revenues and 75% of dividends returned to Government be deposited into the stabilization fund; and

Ø # HAS the Government adopted the Santiago Principles of transparency, generally accepted principles and practices voluntarily endorsed by the International Forum of SWFs members.

The National reported what Ngangan’s response to calls for SWF’s transparency:

Fund has specific conditions: Official

November 22, 2022The NationalMain Stories

PAPUA New Guinea’s sovereign wealth fund (SWF) has specific requirements for deposits into and withdrawals from the stabilisation fund to support the national budget, says Finance Secretary Dr Ken Ngangan.
He said the Government had been transparent in its establishment of the SWF as published in the budget books each year.
Ngangan was responding to a report yesterday in The National claiming a lack of transparency in the functioning of the SWF.
In a statement yesterday, he said: “This is a fund managed strictly in accordance with an Organic Law under the governance of a board.
“The Government has been transparent in its establishment of the SWF and publishes the progress each year in the national budget book along with the assessment of the fund calculations.
“The SWF establishment is a responsibility of the SWF Secretariat within the Department of Treasury.
“The initial funds from Kumul Consolidated Holdings Ltd will be deposited into a SWF trust that operates under the control of the Organic Law on the Sovereign Wealth Fund (OLSWF) and held at arms-length for and on behalf of the SWF by the Department of Finance,” he said.
“Any payments out of this trust must be done so in accordance with the OLSWF and operational costs can be paid in accordance with an annual budget determined by the Board as approved by the National Budget.
“The provisions of the OLSWF come into operation in two phases.
“The first phase came into operation upon certification of the legislation including the parts of the law relating to the preliminary matters, the establishment of the SWF board, and the duties and responsibilities of board members.
“The remaining parts of the OLSWF will come into operation upon the publication of a notice in the National Gazette by the Head of State, in accordance with the advice of the National Executive Council.” 

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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