IMF approves $163 million in new funding for Papua New Guinea

The International Monetary Fund's Executive Board has approved reviews of Papua New Guinea's lending arrangements, leading to the release of approximately $163 million in combined disbursements. These funds are intended to address a protracted balance of payments problem that has caused foreign exchange shortages, as well as risks to balance of payments stability stemming from climate change.

The Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements, initially approved in 2023, provided immediate access to about $82 million upon completion of the sixth review. Additionally, the third review of the 24-month Resilience and Sustainability Facility (RSF) arrangement, approved in 2024, makes available about $81 million to tackle longer-term structural vulnerabilities associated with climate change.

Papua New Guinea successfully met all quantitative performance criteria and indicative targets for end-December 2025 and all indicative targets for end-March 2026 under the EFF/ECF arrangements. All six structural benchmarks due were also met, some with delays. The IMF projects that Papua New Guinea's economic growth will ease to 3.8% in 2026, down from an estimated 5.6% in 2025. Headline inflation is expected to increase modestly to 4.8% in 2026, influenced by higher import costs partially offset by the extension of goods and services tax relief through the end of 2026.