IMF reaches staff-level deal with Papua New Guinea, potentially unlocking about $189 million

The International Monetary Fund (IMF) has reached a staff-level agreement with Papua New Guinea regarding reviews of its funding facilities, which could unlock approximately $189 million in aid. If the IMF's executive board approves the agreement, Papua New Guinea could receive $82 million immediately and up to $107 million in climate financing. This would bring the total amount of funds provided by the IMF to about $1.19 billion.

The IMF forecasts that Papua New Guinea's real GDP growth will slow to 3.1% in 2026 from 6.2% in 2025. This slowdown is attributed to factors such as the plateauing of liquefied natural gas (LNG) output, the impact of El Nino on agriculture and mining, and the rise in import costs due to the ongoing war in the Middle East. The inflation rate is expected to increase to 4.8% during this period.

Papua New Guinea's government managed to meet all but one quantitative performance criterion and all indicative targets for the end of June 2026. However, it missed its fiscal deficit target in the first half of the year. Nonetheless, the government passed a supplementary budget in September and aims to maintain the 2026 deficit at 1.6 billion Papua New Guinea kina, equivalent to $345.28 million.