Papua New Guinea—October 8,2025

In a major endorsement of Papua New Guinea’s (PNG) economic reform agenda, the International Monetary Fund (IMF) has reached a staff-level agreement on key program reviews, a critical step that paves the way for a $220 million disbursement. This financial support is set to arrive as the South Pacific nation’s economy shows signs of significant acceleration, with economic growth picking up to 4.5% in 2025. The positive assessment from the IMF signals strong progress in Port Moresby’s commitment to fiscal discipline, governance improvements, and structural reforms designed to foster resilient and inclusive growth.

The successful conclusion of the mission, which included the Fifth Reviews under the Extended Credit Facility (ECF) and Extended Fund Facility (EFF) arrangements, and the Second Review under the Resilience and Sustainability Facility (RSF) arrangement, is a powerful indicator of the government’s satisfactory performance under the Fund-supported programs. An IMF team, led by Mr. Nir Klein, recently concluded its visit to Port Moresby, noting that nearly all quantitative performance criteria and indicative targets set for the end of June 2025 were met, and a majority of structural benchmarks were implemented by the end of September 2025.

The total anticipated disbursement, subject to the approval of the IMF Executive Board, is approximately $220 million. This comprises roughly $165 million under the ECF-EFF arrangements, which supports the nation’s overall economic stability and reform efforts, and an additional $54 million under the RSF arrangement, which is specifically earmarked for climate-resilience policies. This fresh capital infusion is crucial for providing foreign exchange liquidity, easing current pressures, and funding key government development priorities, including critical capital expenditure in transport, utilities, and health.

Papua New Guinea’s Promising Economic Trajectory

The IMF’s latest economic forecasts present a decidedly optimistic outlook for Papua New Guinea. The projection of 4.5% economic growth picking up in 2025 is a marked improvement, supported by several key factors. The resource sector, particularly the increased production from the Porgera gold mine, is providing a substantial lift. This commodity-driven boost, combined with favourable agricultural production and a steady improvement in access to foreign exchange (FX), is underpinning the upward revision in the growth forecast. Furthermore, the non-resource sector is also showing signs of resilience and sustained growth, providing a more diversified foundation for the country’s economic future.

On the fiscal front, the authorities have demonstrated a solid commitment to responsible management. Following a substantial reduction in the fiscal deficit in 2024, the government is on track to deliver another significant reduction in 2025. This adjustment is being achieved through a two-pronged strategy: enhanced revenue mobilisation via the implementation of the Medium-Term Revenue Strategy and continuous efforts at expenditure rationalisation. These steps are vital to durably reduce debt vulnerabilities and create the necessary fiscal space for social spending and essential infrastructure projects.

Deepening the Reform Agenda

The core of the IMF program in PNG remains a comprehensive, homegrown reform agenda aimed at addressing long-standing structural impediments. The continuity and deepening of these reforms were central to the staff-level agreement.

Key areas of structural reform progress include:

 * Foreign Exchange Market: Access to foreign exchange has reportedly improved significantly over the past year. This success is directly linked to the Bank of Papua New Guinea’s (BPNG) implementation of a more flexible, crawl-like exchange rate arrangement and a targeted FX intervention strategy. The recent decision by the Monetary Policy Committee to increase the Kina Facility Rate is another welcome measure to ensure the consistency of monetary policy with the new exchange rate framework.

 * Governance and Anti-Corruption: Significant strides have been made in strengthening the institutional framework for fighting corruption. The operationalisation of the Independent Commission Against Corruption (ICAC) is a priority, with steps taken to allocate necessary budget resources, and further progress on its oversight committee and interagency cooperation frameworks is expected. Efforts to enhance the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework are also ongoing.

 * Climate Resilience: Under the new Resilience and Sustainability Facility (RSF), PNG is implementing policies to address its long-term vulnerabilities to climate change. The structural benchmarks for this review, focused on building policy buffers and improving climate adaptation measures, are reportedly on track for implementation in the coming weeks.

Challenges and Future Outlook

While the staff-level agreement is a major win, the path ahead is not without its challenges. The IMF staff report acknowledges that the economic outlook remains vulnerable to both domestic and external shocks. Inflation, while projected to rebound to a manageable 3.8% in 2025 from a historical low in 2024, will require careful monitoring. Furthermore, sustaining the momentum of structural reforms, particularly those related to governance and state-owned enterprise (SOE) efficiency, remains a long-term commitment.

The ultimate $220 million disbursement is contingent on the IMF Executive Board’s formal approval, which is generally expected to follow a satisfactory staff-level agreement. This financial and technical support from the IMF is not merely an injection of funds but a signal of international confidence in the government’s direction, providing the essential support needed to help PNG build a more resilient, inclusive, and greener economic future.

Headline Points

 * Disbursement Pending: IMF staff reached a formal agreement on the Fifth ECF/EFF and Second RSF reviews, paving the way for a total disbursement of approximately $220 million upon Executive Board approval.

 * Growth Forecast: Papua New Guinea’s real GDP growth is projected to accelerate, picking up to 4.5% in 2025, driven by the resource sector (notably the Porgera gold mine), improved foreign exchange access, and strong agriculture production.

 * Reform Progress: Authorities met all but one quantitative performance criterion and implemented most structural benchmarks, demonstrating strong program performance across fiscal adjustment, monetary policy, and governance reforms.

 * Foreign Exchange Stability: Reforms have significantly improved the foreign exchange market, supported by the central bank’s adoption of a crawl-like exchange rate arrangement.

 * Governance Boost: Key anti-corruption reforms, including the operationalisation of the ICAC and strengthening the AML/CFT framework, are continuing to be a central focus of the program.

 * Climate Funding: The disbursement includes a component of about $54 million from the Resilience and Sustainability Facility to support climate change adaptation policies.