Press Release No. 25/093

IMF Reaches Staff-Level Agreement on the Fourth Reviews Under the Extended Credit Facility and the Extended Fund Facility, the First Review Under the Resilience and Sustainability Facility, and Completes the 2025 Article IV Mission to Papua New Guinea

April 8, 2025

• The Papua New Guinea authorities and the IMF team reached staff-level agreement on the policies needed to complete the fourth reviews under the Extended Credit Facility and Extended Fund Facility and the first review under the Resilience and Sustainability Facility.
• IMF staff welcomed the authorities’ progress in implementing their homegrown economic reform agenda, which continues to bear fruit. Papua New Guinea’s economic growth is projected to increase to 4.7 percent in 2025 with the outlook remaining broadly positive. Continued fiscal consolidation would help to reduce debt risks, while a tighter monetary policy stance would reduce foreign exchange pressures, support the crawl-like FX arrangement, and keep inflation low.
• The Article IV policy consultation focused on policies to preserve fiscal space for development spending while re-building buffers against shocks, modernize monetary policy frameworks and restore kina convertibility, strengthen governance frameworks, enhance competitiveness, and build resilience to climate change.

Washington, DC: An International Monetary Fund (IMF) team led by Mr. Nir Klein, mission chief for Papua New Guinea, visited Port Moresby from March 27 to April 9, 2025, to review progress under the authorities’ homegrown economic reforms supported by the Extended Credit Facility (ECF), Extended Fund Facility (EFF), and Resilience and Sustainability Facility (RSF) arrangements and discuss economic and financial policies in the context of the 2025 Article IV consultation. Prior to this visit, an IMF delegation led by Mr. Thomas Helbling, Deputy Director of the Asia-Pacific Department, participated in the Green Finance Summit (March 24-26, 2025), which included a roundtable on scaling up climate finance in Papua New Guinea, and met with Prime Minister Marape and Deputy Prime Minister Rosso.

At the conclusion of the mission, Mr. Klein issued the following statement:

“I am pleased to announce that IMF staff and the Papua New Guinea (PNG) authorities have reached a staff-level agreement on policies needed to complete the fourth reviews of the ECF and EFF arrangements and first review of the RSF arrangement. The completion of these reviews, upon approval by the Executive Board of the IMF, would allow for the immediate disbursement of SDR121.07 million (approximately US$161 million) in financing under the ECF-EFF arrangements and SDR19.74 million (approximately US$26 million) in financing under the RSF arrangement. This would bring the total IMF financial support disbursed thus far to SDR461.93 million (about US$616 million).

“Despite a challenging environment, Papua New Guinea’s performance under the IMF-supported program over the past two years has been strong. The authorities have sharply reduced the fiscal deficit and adopted important amendments to the Income Tax Act—a major milestone in the simplification of tax policies; introduced critical governance enhancements to the central bank and strengthened its operations, leading to improved access to foreign exchange and mopping of excess liquidity; and supported the operationalization of the anti-corruption framework.

“Papua New Guinea’s economic outlook remains positive. Growth is expected to increase to 4.7 percent in 2025 from an estimated 3.8 percent in 2024, supported by the gradual resumption of activities at the Porgera gold mine and improvements in access to foreign exchange. Average headline inflation, which is largely affected by the betel nut price volatility, is projected to increase to 4.8 percent in 2025, after declining to a historic low of 0.6 percent in 2024; core inflation, which excludes betel nut and other volatile items, is projected to move up to 4.0 percent in 2025, staying below the historical average. Gross international reserves remained adequate at US$3.7 billion at end-December 2024 (equivalent to about five months of imports of goods and services), providing ample space to continue supporting the crawl-like arrangement.

“In the near-term, the sustained fiscal consolidation set out in the 2025 budget remains appropriate to rebuild policy space and reduce debt vulnerabilities. Further tightening the monetary policy stance through an increase in the Kina Facility Rate is necessary to reduce foreign exchange pressures and keep inflation under control.

“Looking into the medium-term, the authorities’ budget repair strategy, including the objective of achieving a balanced budget by 2027, will lay the foundation for continued strong growth and development. The success of the strategy hinges on revenue mobilization reforms to broaden the tax base and improve compliance, guided by the implementation of the medium-term revenue strategy. Efforts to limit the growth of current spending and strengthen expenditure efficiency are needed to address social and infrastructure needs. IMF staff and the authorities also discussed options to enhance the rules-based fiscal framework and re-build buffers against shocks over the medium-term.  

“The current crawl-like arrangement remains appropriate to bring the Kina to its market-clearing rate and facilitate the return to Kina convertibility, which will also support the economy’s growth and development. To support the development of the financial sector, the Bank of Papua New Guinea should continue modernizing monetary policy operations and strengthening its liquidity management capacity, develop the interbank market and operationalize its lender of last resort function, as set out in the 2024 Central Banking Act.

“The authorities should address the remaining gaps in the anti-money laundering and countering the financing of terrorism (AML/CFT) regime and further strengthen governance frameworks. Allocating sufficient budget resources to the Independent Commission Against Corruption remains critical to ensure its full and effective operationalization.

“Discussions also focused on macro-structural reforms to improve PNG’s external competitiveness and attract foreign investment, including by removing barriers to trade, enhancing export capacity, and further diversifying the economy. Improving the business environment by tackling impediments related to law and order, infrastructure connectivity, and human capital is also critical.

“To address longer-term challenges from climate change, the authorities should continue strengthening disaster risk management, integrating climate considerations in infrastructure governance, enabling climate finance, and setting up fiscal incentives for forest protection and energy efficiency, in line with their international climate commitments and supported by the RSF arrangement. The recent climate finance roundtable event, which provided several concrete and innovative climate finance options, will support the authorities’ efforts to effectively scale up resources for climate action.

“The IMF will continue to work closely with the Papua New Guinea authorities and stands ready to help them, not only through financing and policy advice, but also through technical assistance, coordinated with other development partners.

“The IMF team is grateful to the authorities for their warm hospitality, productive collaboration, and candid policy dialogue. In addition to the aforementioned meetings with the Prime Minister Marape and Deputy Prime Minister Rosso, the IMF team held meetings with Minister for Treasury Ling-Stuckey, Bank of PNG Governor Genia, Secretary of Treasury Oaeke, Bank of PNG Deputy Governor Yabom, and other senior government officials. The team also had constructive meetings with representatives from the private sector and development partners.”