- The Executive Board completed the Sixth Reviews under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements for Papua New Guinea, providing the country with immediate access to about US$82 million.
- The Executive Board also completed the Third Review under the Resilience and Sustainability Facility (RSF) arrangement, making available about US$81 million to support the authorities’ policies to address longer-term structural balance of payments vulnerabilities associated with climate change.
- The IMF-supported programs will continue to support Papua New Guinea’s homegrown reform agenda, focusing on strengthening debt sustainability, alleviating FX shortages, fostering good governance, and building climate resilience, while protecting the vulnerable and promoting inclusive and sustainable growth.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed the Sixth Reviews under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements, and the Third Review under the Resilience and Sustainability Facility (RSF) arrangement for Papua New Guinea. The completion of these reviews allows for the immediate disbursement of SDR 60.53 million (about US$82 million) under the EFF/ECF arrangements and SDR 59.22 million (about US$81 million) under the RSF arrangement, bringing total disbursements under the IMF-supported programs so far to SDR 742.23 million (about US$1012 million).[1]
The EFF/ECF arrangements with Papua New Guinea were approved by the Executive Board on March 22, 2023, in an overall amount equivalent to SDR 684.32 million (260 percent of quota) to help address a protracted balance of payments need—manifested in foreign exchange shortages—and to support the authorities’ reforms to address longstanding structural impediments to inclusive growth. The 24-month RSF arrangement, which was approved by the Executive Board on December 11, 2024, in an overall amount of SDR 197.4 million (75 percent of quota), aims to help address risks to prospective balance of payments stability associated with longer-term structural challenges posed by climate change.
Papua New Guinea’s economic outlook remains resilient despite increased uncertainty and less favorable external environment. Growth is projected to moderate to 3.8 percent in 2026 after accelerating to 5.6 percent in 2025, reflecting the plateauing of LNG production and—amid the ongoing war in the Middle East—weaker demand for non-resource exports as well as higher import costs. Headline inflation is expected to rise modestly to 4.8 percent in 2026 driven by rising shipping costs, which are partially mitigated by the extension of GST relief through end-2026. Over the medium term, growth is expected to moderate and stabilize at just above 3 percent, driven mainly by continued expansion of the non-resource sector, with inflation converging to around 4.5 percent.
The outlook is subject to significant downside risks, including weaker external demand, social instability, unstable critical utilities, and natural disasters. Global risks arising from geopolitical conflicts, including a prolonged war in the Middle East, escalating protectionist trade measures, and a decline in international aid, could create additional pressure on growth and inflation. These risks are exacerbated by considerable capacity constraints that limit the government’s ability to design and implement policies aimed at economic stabilization, development, and climate adaptation. Key upside risks include higher commodity prices and the kickoff of major resource projects for which final investment decision could occur in the coming months.
Program performance has remained satisfactory, with the authorities displaying a sustained commitment to reforms. All quantitative performance criteria and all indicative targets (IT) for end-December 2025 and all ITs for end-March 2026 under the EFF/ECF arrangements were met. All six structural benchmarks due were met or implemented with delay, and three reform measures under the RSF arrangement were implemented.
At the conclusion of the Executive Board’s discussion, Mr. Bo Li, Deputy Managing Director, and Acting Chair, made the following statement:
“The Papua New Guinea (PNG) authorities have further advanced their reform agenda under the Fund-supported programs, with these efforts yielding tangible results, including strong growth, and declining debt and FX shortages. Sustained commitment to the country’s homegrown reforms remains of paramount importance to achieve a more resilient and inclusive economic growth.
“The authorities have successfully reduced the fiscal deficit and are on track to deliver additional consolidation in 2026. Continued revenue mobilization, consistent with the authorities’ Medium-Term Revenue Strategy, and further steps to rationalize current spending and improve public investment efficiency will be critical to durably reduce public debt vulnerabilities. Securing fiscal space for social and capital spending, and engaging in prudent borrowing are also essential.
“Access to foreign exchange has greatly improved thanks to central banking reforms, reduction of the Kina’s overvaluation, and higher commodity prices. The crawl like arrangement remains appropriate as the nominal anchor and will help restore Kina convertibility. A tighter monetary policy stance, through timely adjustments in the Kina Facility Rate, is needed to ensure consistency between monetary policy and the exchange rate regime. Further developing the interbank market, strengthening the Bank of PNG’s liquidity management capacity, and fully operationalizing its lender of last resort function would help improve monetary policy transmission and safeguard financial stability.
“Decisive actions to improve governance and strengthen financial integrity will make the business environment more conducive to activity and investment. It is imperative for the authorities to strengthen the AML/CFT framework and ensure that the Independent Commission Against Corruption can fully carry out its mandate.
“Building resilience to climate-related risks is crucial to secure high and inclusive growth. The Resilience and Sustainability Facility’s focus on strengthening disaster risk management, integrating climate considerations in infrastructure governance, creating an enabling environment for climate finance, and setting up incentives for forest protection and fuel efficiency will help attain this objective.
[1] Under the IMF’s Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The staff report will be shortly published on the www.imf.org/PapuaNewGuinea page.
read more: https://www.imf.org/en/news/articles/2026/06/08/pr26192-papua-new-guinea-imf-concl-6th-rev-under-ext-arr-eff-arr-under-ecf-3rd-rev-rsf-arr
