KIRSTEN AIKEN: Australia is backing the Government of Tonga in trying to put debt relief from crippling Chinese loans on the agenda of the Pacific’s peak summit meeting. Tonga is one of several Pacific countries struggling to pay down loans which have risen sharply over the last decade. Australia’s Minister for the Pacific, Concetta Fierravanti-Wells earlier this year accused China of funding roads to nowhere and of burdening small nations with heavy debts. She’s welcomed Tonga’s intervention and is speaking to Steven Dziedzic in Canberra.
STEPHEN DZIEDZIC: Minister, thanks for coming in.
CONCETTA FIERRAVANTI-WELLS: It’s my pleasure Stephen.
STEPHEN DZIEDZIC: Now the Prime Minister of Tonga has said he wants debt distress to be on the agenda when the Pacific Island leaders meet next month. He says that he wants to see Pacific nations come together and to ask China for a debt waiver. Do you agree this is a good idea? Should it be on the agenda at PIF?
CONCETTA FIERRAVANTI-WELLS: Well, there’s no doubt that issues pertinent to debt and debt sustainability are likely to be discussed at PIF. It’s interesting to see Prime Minister Pōhiva’s comments. Of course Tonga is a very small country. It is a country that has been devastated by cyclones. It has a very high debt to GDP ratio of around 60%. The debt that we’re reputed to be talking about is around $150-160 million and it’s also our understanding that that debt was, forgiveness of that debt has been refused. So my sense is, and certainly having come recently from the Foreign, Forum Foreign Minister’s meeting in Samoa last week, there was discussion in the corridors about debt. We’re starting to see issues pertinent to debt, debt sustainability, lending feasibility, starting to appear in Pacific Island Forum documentation so my sense is that it will be discussed. I think it is important that it is discussed because it is vitally important to so many countries in the Pacific.
STEPHEN DZIEDZIC: So how about that that call though for it to be on the agenda? In the corridors is one thing, but how about on the agenda as a formal item that should be raised, do you think that should happen?
CONCETTA FIERRAVANTI-WELLS: Well I think that what will likely happen is Prime Minister Pōhiva will go through the appropriate processes which would be to approach the Pacific Island Forum Secretariat and ask for this issue to be put on the agenda. I would envisage that it will be raised.
STEPHEN DZIEDZIC: And Australia would be supportive of that, if it was formally raised?
CONCETTA FIERRAVANTI-WELLS: Well I think at this point, as is in keeping with other meetings of the Pacific Island Forum, it’s very much a Talanoa approach and that is a discussion approach. So I have no doubts that if matters and different countries raise matters to put on the agenda, whatever that matter will be, I’m sure that as we have in the past, we have no difficulties with matters being raised and put on the agenda for discussion.
STEPHEN DZIEDZIC: Hypothetical I grant you, but let’s say there is agreement to get it on the agenda, let’s say there is a call issued from PIF formally asking for uniform debt relief, do you think Beijing would listen?
CONCETTA FIERRAVANTI-WELLS: Well that’s a matter obviously for whoever the donor was, whether it’s China or it could be another donor. I mean let’s not forget that the IMF has done work here and has talked about debt distress. Prime Minister Pōhiva talks about debt hangovers. We know, and we know from the recent Lowy Institute Mapping, that we have quite a number of donors operating in the Pacific. Indeed the Lowy work looks at 13,000 projects.
STEPHEN DZIEDZIC: But do you think that China should, in this circumstance, if there are cases of extreme debt distress like we’ve seen in Tonga, do you think that China does have an obligation to forgive that debt?
CONCETTA FIERRAVANTI-WELLS: Well I think when we talk about obligations, I think Stephen there are two obligations that I think we should really put on the table in this discussion. One is obviously the obligation that a country has to its own people and the sovereign right it has to seek loans and to undertake debt and it does so, it has a sovereign right to do so. But at the same time, as donors and Australia of course is the largest donor in the Pacific, also have a responsibility to ensure that in giving money and I speak now as a donor but also a responsibility that we take on board and we hope that other donors likewise take on board and that is to take into account, not only the core priorities of that government, but also to ensure that it is a sustainable lending, it is a sustainable borrowing but also that it does not impose unnecessary debt burdens particularly on vulnerable countries. So …
STEPHEN DZIEDZIC: Can I just ask Minister, you’ve talked a bit about obviously before, roads to nowhere and the like, we don’t need to revisit those remarks directly, but do you believe that China’s approach to this fundamentally has been irresponsible? Have they allowed individual countries to be saddled with unsustainable debts?
CONCETTA FIERRAVANTI-WELLS: I think Stephen, what is important here is that, to understand, is that loans have been given for all sorts of things. Yes, I did make comments but I made those comments in the context of this issue of debt sustainability but also to ensure that these projects, for which lending is given, have some productive end. It is important that this issue be discussed and this was really the reason why I raised matters earlier this year. My concerns have been about debt sustainability and so I think it’s important that this issue be discussed and certainly I have had discussions with many people since those comments and people who have welcomed me raising this issue, because it is an issue that goes and cuts across quite a number of other issues in the Pacific.
STEPHEN DZIEDZIC: Alright Minister, thanks for your time this afternoon, we appreciate it.
CONCETTA FIERRAVANTI-WELLS: Thanks very much Stephen.
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