Papua New Guinea Nears $189 Million in IMF Support as Growth Slows

Papua New Guinea Nears $189 Million in IMF Support as Growth Slows

2026-10-08 economy

Port Moresby, Thursday, 8 October 2026.
Papua New Guinea reached a staff-level agreement with the IMF for $189 million to strengthen economic stability and push reforms forward as projected growth eases to 3.6% in 2026.

IMF Financing and Reform Milestones

An International Monetary Fund team led by Nir Klein concluded a visit to Port Moresby on 7 October 2026, assessing the government’s homegrown reforms [4]. The staff-level agreement potentially unlocks approximately US$82 million under the Extended Credit Facility and Extended Fund Facility [4]. Additionally, up to US$107 million is available under the Resilience and Sustainability Facility [4]. The total disbursed support amounts to 189 million, bringing total support to about US$1.193 billion [4]. Executive Board approval is required to unlock these funds, with the current IMF programme scheduled to expire in December 2026 [4]. Reforms focus on kina convertibility, interbank lending, and liquidity absorption to address economic stability [4].

According to the Asian Development Outlook report released in April 2026, Papua New Guinea’s economic growth is projected to moderate to 3.6% in 2026 [1]. The forecast indicates a further decrease to 3.4% in 2027 [1]. This deceleration highlights ongoing structural challenges in the Pacific nation’s economy [1]. Overall inflation in PNG is projected to increase from 4.4% in 2025 to 4.6% in 2026, a change of 0.2 percent [1]. Inflation is expected to ease to 4.0% in 2027 [1]. The conflict in the Middle East is testing the resilience of developing Asia and the Pacific, impacting energy and commodity prices [1].

Sector Performance and Export Earnings

Westpac Pacific reported in June 2026 that the economy remained resilient in the first half of 2026 [3]. Real GDP growth was estimated at 5.5 percent in 2025, with a track for around 4.6 per cent in 2026 [3]. Growth is being driven by activity in provincial centres, including the Highlands, benefiting from internal migration and urbanisation [3]. LNG export volumes reached about 3.73 million tonnes year to date to May 2026 [3]. Gold exports to Australia reached K6.51 billion year to date to April, up 30 per cent from the same period in 2025 [3]. Foreign exchange conditions have improved, with typical order clearing times reducing from several weeks to just days [3].

Structural Challenges and Power Initiatives

Structural challenges including power shortages and security concerns continue to weigh on the outlook [1]. The Dirio Gas & Power project was recently launched, providing the City of Port Moresby its much-needed electricity [5]. The project supplies 45 MW of electricity to Port Moresby’s grid at a rate of 37 toea per kilowatt [5]. Private sector investment teams note that access to finance and regulatory hurdles are key concerns for entrepreneurs [2]. Public sentiment reflects these pressures, with statements on national economic and food crisis reaching leadership [6]. Macro-fiscal reforms have reduced the fiscal deficit, but inefficiency in public capital spending remains a concern [1].

Sources


Economic Growth Papua New Guinea